Question

Question 6 View Policies Current Attempt in Progress Bramble Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2020, 10,600 suits were produced The following standard and actual cost data applied to the month of May when normal capacity was 17,500 direct labor hours. All materials purchased were used. Cost Element Standard (per unit) Actual Direct materials 7 yards at $4.50 per yard $325,815 for 74.900 yards ($4.35 per yard) Direct labor 1.10 hours at $13.00 per hour $168,304 for 12,560 hours ($13.40 per hour) 1.10 hours at $6.70 per hour (fixed $4.00; variable $2.70) $48,200 fixed overhead $36,500 variable overhead Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $70,000, and budgeted variable overhead was $47.250. Compute the total price, and quantity variances for (1) materials and (2) labor. (Round per unit values to 2 decimal places, eg 52.75 and final answers to decimal places, eg. 52.) (1) Total materials variance Materials price variance Materials quantity variance $ (2) Total labor variance Labor price variance Labor quantity variance $

Answer 1

(a)
1	Total material variance=Material price variance+Material quantity variance
	Material price variance=Actual quantity of material used*(Actual rate of material-Standard rate of material)
	If the answer is negative, variance is favorable.Otherwise unfavorable.
	Actual material used=74900 yards
	Standard rate of material=$ 4.50 per yard
	Actual rate of material=$ 4.35 per yard
	Material price variance=74900*(4.35-4.50)=-11235=$ 11235 (Favorable)
	Material quantity variance=Standard rate of material*(Actual quantity consumed-Standard quantity)
	If the answer is negative, variance is favorable.Otherwise unfavorable.
	Standard rate of material=$ 4.50 per yard
	Standard quantity=Actual production*yards required per suit=10600*7=74200 yards
	Actual material used=74900 yards
	Material quantity variance=4.50*(74900-74200)=3150=$ 3150 (Unfavorable)
	Total material variance=-11235+3150=-8085=$ 8085 (Favorable)
2	Total labor variance=Labor price variance+labor quantity variance
	Labor price variance=Actual hours worked*(Actual rate of labor-Standard rate of labor)
	If the answer is negative, variance is favorable.Otherwise unfavorable.
	Actual hours worked=12560 hours
	Standard rate of labor=$ 13 per hour
	Actual rate of labor=$ 13.40 per hour
	Labor price variance=12560*(13.40-13)=5024=$ 5024 (Unfavorable)
	Labor quantity variance=Standard rate of labor*(Actual hours worked-Standard hours)
	If the answer is negative, variance is favorable.Otherwise unfavorable.
	Standard rate of labor=$ 13 per hour
	Standard hours=Actual production*Standard hours per suit=10600*1.10=11660 hours
	Actual hours worked=12560 hours
	Direct labor quantity variance=13*(12560-11660)=11700=$ 11700 (Unfavorable)
	Total labor variance=5024+11700=16724=$ 16724 (Unfavorable)
(b)	Total overhead variance=Total overhead as per flexible budget-Actual overhead
	If the answer is positive, variance is favorable.Otherwise unfavorable.
	Total overhead as per flexible budget:
						$
	Variable overhead		(10600*1.10*2.70)			31482
	(Based on labor hours using actual production)
	Fixed overhead		(17500*1.10*4)			77000
	(Based on labor hours using normal production)
	Total					108482
	Actual overhead:
						$
	Variable overhead					36500
	Fixed overhead					48200
	Total					84700
	Total overhead variance=Total overhead as per flexible budget-Actual overhead=108482-84700=$ 23782 (Favorable)