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# &quot;PROBLEM 8-20A Direct Materials and Direct Labor Variances; Computations from Incomplete Data (LO2, LO3) CHECK FIGURE (1a) Actual cost:90 per...

"PROBLEM 8-20A
Direct Materials and Direct Labor Variances; Computations from Incomplete Data
(LO2, LO3)

CHECK FIGURE
(1a) Actual cost: \$7.90 per foot
(2a) Standard labor rate: \$7.50 per hour

Cramer Company manufactures a product for which the following standards have been set:

Standard Quantity
or Hours Standard Price or Rate Standard Cost
Direct materials 2.00 feet \$8.00 per foot \$16.00
Direct labor ? hours ? per hour ?

During June, the company purchased direct materials at a cost of \$49,770, all of which were used in the production of 3,000 units of product. There were no beginning inventories of raw materials. In addition, 5,400 hours of direct labor time were worked on the product during the month. The cost of this labor time was \$38,340. The following variances have been computed for the month:

Materials quantity variance \$2,400 U
Total labor variance \$90 U
Labor efficiency variance \$2,250 U

Required:

1. For direct materials:
a. Compute the actual cost per foot for materials for June.
b. Compute the materials price variance and a total variance for materials.
2. For direct labor:
a. Compute the standard direct labor rate per hour.
b. Compute the standard hours allowed for the month’s production.
c. Compute the standard hours allowed per unit of product.

(Hint: In completing the problem, it may be helpful to move from known to unknown data either by using the columnar format shown in Exhibits 8–4 and 8–6 or by using the variance formulas.)

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