Question

Anders Clothing manufactures ambroidered jackets. The oompary usos a standard cost systom to contral manufacturing conta. The following duta represent the standard unit cost of a jocket:

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Read the reaulroments.
Requirement 1. Compute the price and quantly variances for direct muterials. (Eritor the varanses ne ponitive numben. Fintine curroncy ainounta to the rearont cont and your antaen. Begin by determining the formula for the peice variarce, then compute the proe variance for dinct materials.
Data table
Direct materals (3.0sq. ftx $4.00 per sq.ft) $12.00
Direct labor(2.0 hours x $9.40 per hour) 18.80
Manufacturing overhead:
Variable (20 hours x $0.65 per hours) $1.30
Fixed (2.0 hours x $2.20 per hour) 4.40 5.70
Total standard in total was budgeteed to be $63,460 for each month
Actual data for november of the current year include the following
Fixed overhead in total was budgeted to be $63,460 for each month. Actual data for November of the current year include the following:
a. Actual production was 13,600 jackets.
b. Actual direct materials used was 2.70 square feet per jacket at an actual cost of $4.15 per square foot. (Assume the direct materials purchased is the same as the direct materials used.)
c. Actual direct labor usage of 24,480 hours for a total cost of $235,008.
d. Actual fixed overhead cost was $55,748, while actual variable overhead cost was $20,808.
Requirements
1. Compute the price and quantity variances for direct materials.
2. Compute the rate and efficiency variances for direct labor.
3. Compute the rate and efficiency variances for variable overhead.
4. Compute the fixed overhead budget variance and the fixed overhead volume variance.
5. Company management intentionally purchased superior materials for November production. How did this decision affect the other cost variances? Overall, was the decision wise? Explain.
6. Journalize the usage of direct materials and the assignment of direct labor, including the related variances.

Answer 1

The price variance for direct materials is $0.405 and the quantity variance is -$1.20.

Step-by-step explanation:

To compute the price variance for direct materials, we need to calculate the difference between the actual cost and the standard cost per unit, and then multiply what we get by the actual quantity used. The formula for the price variance is (Actual price - Standard price) * Actual quantity. In this case, the actual cost per square foot of direct materials is $4.15, and the standard cost per square foot is $4.00. The actual quantity used is 2.70 square feet per jacket. Therefore, the price variance for direct materials is ($4.15 - $4.00) × 2.70 = $0.405.

To compute the quantity variance for direct materials, we need to calculate the difference between the actual and the standard quantity allowed, and then multiply it by the standard cost per unit. The formula for the quantity variance is (Actual quantity - Standard quantity) * Standard cost. In this case, the actual quantity used is 2.70 square feet per jacket, and the standard quantity allowed is 3.00 square feet per jacket. The standard cost per unit is $4.00. Therefore, the quantity variance for direct materials is (2.70 - 3.00) × $4.00 = -$1.20.