Al-Shabad Company Produces a Single Product During the Past Month, the Company Purchased 7,000 Pounds of the Following

question 88

Essay

Al-Shabad Company produces a single product. The company has set the following standards for materials and labor:
$\begin{array}{lcc}&\text {Standard quantity or hours per}\\&\text {unit}&\text {Standard price or rate}\\\text { Direct materials } & ? \text { pounds per unit } & \$ ? \text { per pound } \\\text { Direct labor } & 3 \text { Ohours per unit } & \$ 10 \text { per hour }\end{array}$

During the past month, the company purchased 7,000 pounds of direct materials at a cost of $17,500. All of this material was used in the production of 1,300 units of product. Direct labor cost totaled $36,750 for the month. The following variances have been computed:
$\begin{array}{lrr}\text { Materials quantity variance } & \$ & 1,375 \mathrm{U} \\\text { Total materials variance } & \$ & 375 \mathrm{~F} \\\text { Labor efficiency variance } & \$ & 4,000 \mathrm{~F}\end{array}$

Required:
1. For direct materials:
a. Compute the standard price per pound of materials.
b. Compute the standard quantity allowed for materials for the month's production.
c. Compute the standard quantity of materials allowed per unit of product.
2. For direct labor:
a. Compute the actual direct labor cost per hour for the month.
b. Compute the labor rate variance.

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