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Standard Costing & Variance Analysis Guide

The document outlines a problem related to standard costing and variance analysis for Ultra Shine Company, which manufactures a cleaning solvent. It provides standard and actual costs for materials and labor used in producing 500 55-gallon drums, and requires calculations for various variances including material price, mix, yield, and labor rate, mix, and yield variances. The problem emphasizes the importance of analyzing variances to assess performance against standards.

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chrisjamesgarcia05
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17 views1 page

Standard Costing & Variance Analysis Guide

The document outlines a problem related to standard costing and variance analysis for Ultra Shine Company, which manufactures a cleaning solvent. It provides standard and actual costs for materials and labor used in producing 500 55-gallon drums, and requires calculations for various variances including material price, mix, yield, and labor rate, mix, and yield variances. The problem emphasizes the importance of analyzing variances to assess performance against standards.

Uploaded by

chrisjamesgarcia05
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Chapter 4 – Standard Costing and Variance Analysis (Additional Problem)

Ultra Shine Company manufactures a cleaning solvent. The company employs both skilled and unskilled workers. To
produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor. The standard
and actual material and labor information is presented below:

Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon

Skilled Labor: 4 hours @ $12 per hour


Unskilled Labor: 2 hours @ $ 7 per hour

Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon

Skilled labor hours: 1,950 @ $11.90 per hour


Unskilled labor hours: 1,300 @ $7.15 per hour

During the current month Ultra Shine Company manufactured 500 55-gallon drums.
Required:
a. What is the total material price variance?
b. What is the total material mix variance?
c. What is the total material yield variance?
d. What is the labor rate variance?
e. What is the labor mix variance?
f. What is the labor yield variance?

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