# Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations,...

## Question:

Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials, X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis):

Raw Material Standard Labor Time
Product X442 Y661 Sintering Finishing
Alpha6 2.0 kilos 1.5 litres 0.10 hours 0.80 hours
Zeta7 3.0 kilos 2.5 litres 0.45 hours 0.90 hours

Information relating to materials purchased and materials used in production during May is as follows:

Material Purchases Purchase Cost Standard Price Used in production
X442 14,800 kilos $66,600$4.30 per kilo 9,300 kilos
Y661 15,800 liters $23,700$1.60 per liter 13,800 litres

The following additional information is available:

a) The company recognizes price variances when materials are purchased.

b) The standard labor rate is $22.00 per hour in Sintering and$21.00 per hour in Finishing.

c) During May, 1,220 direct labor-hours were worked in Sintering at a total labor cost of $28,060, and 2,930 direct labor-hours were worked in Finishing at a total labor cost of$67,390.

d) Production during May was 2,300 Alpha6s and 1,600 Zeta7s.

Required:

1) Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. (Round your answers to 2 decimal places.)

Standard Quantity or Hours Standard Price or Rate Standard Cost
Alpha6:
Direct Materials - X442 kilos per kilo
Direct Materials - Y661 liters per liter
Direct Labor - Sintering hours per hour
Direct Labor - Finishing hours per hour
Total $0.00 Zeta7: Direct Materials - X442 kilos per kilo Direct Materials - Y661 liters per liter Direct Labor - Sintering hours per hour Direct Labor - Finishing hours per hour Total$0.00

2) Compute the materials price and quantity variances for each material. Indicate the effect of each variance by selecting "F" for Favorable, "U" for Unfavorable, and "None" for No Effect (i.e., zero variance). (Round your answers to 2 decimal places.)

Direct Materials Variance - Materials X442 :
- * = Variance
Materials Price Variance 0
- * = Variance
Materials Quantity Variance 0
Direct Materials Variance- Materials Y661 :
- * = Variance
Materials Price Variance 0
- * = Variance
Materials Quantity Variance 0

3) Compute the labor rate and efficiency variances for each operation. Indicate the effect of each variance by selecting "F" for Favorable, "U" for Unfavorable, and "None" for No Effect (i.e., zero variance) (Round your answers to 2 decimal places.)

Direct Labor Variances-Sintering :
- * = Variance
Labor Rate Variance 0
- * = Variance
Labor Efficiency Variance 0
Direct Labor Variances-Finishing :
- * = Variance
Labor Rate Variance 0
- * = Variance
Labor Efficiency Variance 0

## Variance:

A variance arises when the actual cost differs from the standard cost. If the actual cost or cost element is more than the standard cost, then the variance is said to be unfavorable. But if the actual cost or cost element is less than the standard cost, then the variance is said to be favorable. If there's no difference between the actual and standard cost, then there's no variance.