Ponte Company Produced 2,500 Widgets During December Using 4,000 Units

question 162

Essay

Ponte Company produced 2,500 widgets during December using 4,000 units of materials at a cost of $5.00 each. It also used 5,000 direct labour hours at a rate of $7.00 per hour. Its direct materials standard is 2 units per widget. Its direct labour standard is 2.5 hours per widget.
Its materials price variance was a favourable $8,000, and its labour rate variance was an unfavourable $1,000.
Required:
A. Calculate the standard materials price per unit.
B. Calculate the standard labour rate.
C. Determine the materials usage variance and whether it is favourable or unfavourable.
D. Determine the labour efficiency variance and whether it is favourable or unfavourable.

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Definitions:

Human Resources

The division of a company involved in recruiting, hiring, training, and managing employees, focusing on enhancing workforce performance and compliance.

Operations Manager

A professional responsible for overseeing the production of goods and services, ensuring that business operations are efficient, effective, and aligned with the company's goals.

Process Control Systems

Automated systems used to monitor and control physical processes to ensure they operate within set parameters and quality standards.

Statistical Process Control Charts

Tools used in quality control that plot data over time to identify variances from the norm, highlighting potential issues requiring investigation.