Care Craft Manufacturing Has Developed the Following Standards for One

question 95

Essay

Care Craft Manufacturing has developed the following standards for one of its products: STANDARD VARIABLE COST CARD
One Unit of Product

$\begin{array}{lr}\text { Materials ( } 4 \text { pounds } \times \$ 5 \text { per pound) } & \$ 20.00 \\\text { Direct labor ( } 1 \text { hour } \times \$ 7 \text { per hour) } & 7.00 \\\text { Variable manufacturing overhead ( } 1 \text { hour } \times \$ 4 \text { perhour) }&4.00\\\text { Total standard variable cost per unit }&\$31.00\end{array}$
The company records materials price variances at the time of purchase.
The following activity occurred during the month of December:

$\begin{array}{ll}\text { Materials purchased } & 4,100 \text { pounds costing } \$ 18,800 \\\text { Materials used } & 3,640 \text { pounds } \\\text { Units produced } & 900 \text { units } \\\text { Direct labor } & 1,000 \text { hours costing } \$ 7,800\end{array}$
Required:
a.Calculate the direct materials price variance.
b.Calculate the direct materials usage variance.
c.Calculate the direct labor rate variance.
d.Calculate the direct labor efficiency variance.

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Definitions:

Cost Recovery Deduction

A tax deduction that allows a taxpayer to recover the cost of an investment over time through depreciation, amortization, or depletion.

50% Bonus

A premium payment of half the worth of an item, salary, or stipulated amount as an additional reward.

Cost Recovery Deduction

A deduction that allows a taxpayer to recover the cost of an investment over time, such as through depreciation or amortization.

Interest Expense

The cost incurred by an entity for borrowed funds, which is deductible under certain conditions for tax purposes.