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:

Variable Input

A factor of production whose quantity can be changed easily and flexibly by a firm in the short run to adjust output levels.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it shows the variable cost per unit of output.

Marginal Product

The extra output generated from the inclusion of one additional unit of a particular input while maintaining all other inputs unchanged.

Variable Cost

Costs that change in proportion to the level of production output or activity level of an entity.