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

question 166

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.
A. Calculate the standard 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:

Fixed Costs

Fixed costs are expenses that do not fluctuate with changes in production volume or business activity levels.

Service Department

An organizational unit that provides support to the main production operations, often through maintenance, logistics, or administrative services.

Order Fulfillment Department

The division within a company that is responsible for processing customer orders and ensuring they are delivered to the correct address in a timely manner.

Variable Costs

Costs that change in proportion to the level of goods or services produced or sold.