Assignment Date of Submission: May 6, 2020, on or before 11:30AM.

INSTRUCTION:
Write your answer on a clean sheet of paper (any paper will do as long as it is clean). Please, make sure
that your penmanship is readable. These are problems sets.
How to submit your answers:
Take a picture of your answers and sent it to me through messenger.
If you have any questions, kindly write it in the comment box.

Problem 1

Delta Woods Inc., manufactures wood products for the use in small and medium size offices. One of its
products is a chair.

Last month Delta manufactured 4,000 chairs for which company purchased and used 11,000 feet of wood.
The total cost of 11,000 feet of wood was $37,400.

According to direct materials price and quantity standards, one chair requires 2.5 feet of wood at a cost of
$3.60.

Required:

1. Compute the standard cost of wood needed to manufacture 4,000 chairs.

2. Compute direct materials price and quantity variance for the last month.

Problem 2

Alpha Sports Company manufactures high quality sports products. Products are sold in the local as well
as international markets. The company uses a well established standard costing system to control costs.
One of the products of Alpha Supports Company is a cricket bat. The standard requirements to
manufacture one bat are as follows:

Direct materials: 5 feet wood @ $0.60 per foot

Direct labor: 1.2 hours @ $14 per hour

During the last month, Alpha manufactured 4,000 cricket bats. 50,000 feet wood was purchased @ 0.56
per foot. 20,000 feet wood was in stock at the end of the month. 6,400 direct labor hours were worked @
$15 per hour.

Required:

1. Compute direct materials price and quantity variances.

2. Compute direct labor rate and efficiency variances.
3. Explain the significance and possible causes of each variance.

Problem 3
Universal Electronics Inc., manufactures a voice recording device. The following information has been
obtained from direct labor standards that the company has set for this device.

• Standard time to complete one unit: 24 minutes

• Standard direct labor rate: $12 per hour

During the month of June, 8,500 hours were worked and 20,000 units were manufactured. The actual
direct labor and variable manufacturing overhead costs incurred for the month of June were as follows:

• Direct labor cost: $98,600

• Variable manufacturing overhead cost: $78,200

The budgeted variable manufacturing overhead rate of Universal Electronics Inc., was $8.

Required:

1. Compute labor rate variance and labor efficiency variance for June.
2. Compute variable overhead spending and efficiency variances for June.

Problem 4

P&G company produces large size bags for the use of tourists. Company uses standard costing system to
control costs. The standards for materials and labor costs to manufacture 1 bag are as follows:

• Direct materials: 7.2 lbs. @ $5 per lb.

• Direct labor: 0.4 hours @ $20 per hour

During the last month, P&G produced 2,500 large bags. 20,000 lbs. of direct materials were purchased @
$4.8 per lb. There was no direct materials inventory at the beginning and at the end of the month. 900
direct labor hours were recorded @ $24 per hour.

Required:

1. Compute direct materials price and quantity variance.

2. Compute direct labor rate and efficiency variance.

Problem 5

ABC company manufactures and sells product X. The standards for materials and labor costs to
manufacture one unit of product X are as follows:

• Direct materials: 6lbs. @ $2 per lb.

• Direct labor: 1 hour @ $8 per hour

ABC company purchased 26,000 pounds of direct materials for $27,300 and manufactured 4,000 units of
product X during January 2012.
The following variances data belong to the January 2012:

• Materials price variance: $2,600 Unfavorable

• Materials quantity variance: $2,000 Unfavorable
• Direct labor rate variance: $1,520 Unfavorable
• Direct labor efficiency variance: $1,600 Favorable

Required:

1. Compute standard quantity of direct materials allowed (in pounds) for January production.
2. Compute the actual quantity of materials used (in pounds) for January production.
3. Compute the standard direct labor hours allowed for January production.
4. Compute actual direct labor hours worked for January production.
5. Compute actual direct labor rate.