Question

question 3&4

French Co. makes berets out of a special dyed wool fabric. During the month, the company made 12,000 berets using 13,200 decimeters of fabric. The fabric cost 522,720 Euros. According to company standards, each beret requires 1.2 decimeters of fabric at a cost of 36 Euros per decimeter. Find a) actual price of fabric per decimeter; b) standard quantity given the number of berets produced; c) amount of material price variance; d) amount of material quantity (efficiency) variance 3. 4. Lunch Co. makes sandwiches for convenience stores. Last month, it made 42,000 sandwiches using 1,680 direct labor hours. It paid its employees a total of $13,608. According to company standards, employees should make 20 sandwiches per hour and be paid $9 per hour. Find a) actual labor rate; b) standard hours allowed; c) labor rate (price) variance; d) labor efficiency (quantity) variance

Answer 1

3 (a)	Actual price of fabric per decimeter= total cost/actual fabric quantity used
	522720 Euro/13200 Decimeter
	39.6 per Decimeter
	Standard quantity given the number of Berets produced= Standard unit per unit*actual Quantity
b	1.2 Decimeter * 12000 beret
	14400 Decimeter
c	Material price variance = (standard rate-Actual rate)* actual quantity
	(36-39.6)*13200
	Euro 47520(Unfavourable)
d	Material quantity efficiency variance = (required standard quantiy-actual quantity used)*standard rate per unit
	(14400-13200)*36
	Euro 43200 (favourable)
4(a)	Actual Labor rate = Actual cost/ actual labor hour used
	$13608/$1680
	$8.1 per hour
b	Standard hours allowed = standard hours required per unit * actual quantity
	(1/20 sandwich per hour * 42000 sandwich)
	2100 per hour
c	Labor rate (price) variance = ( standard rate- actual rate)* actual hours
	(9-8.10)*1680
	$1512 (Favourable)
d	Labor efficiency (quantity) variance = (Required standard hour- actual hour used)* standard rate per hour
	(2100-1680)*9
	$3780 (Favourable)