Question

Problem 3: Standard Cost Variances - 40 Points Rawlings Company produces a baseball called the Cutter. The company has recently established a standard cost system to help control costs and established the following standards for the Cutter baseball: Direct materials Direct labor 7 ounces per baseball at $0.33 per ounce 1.3 hours per baseball at $7.00 per hour During April, the company produced 5,300 Cutter baseballs. Actual production data for the month follow: Direct materials Direct labor 38,000 ounces were purchased and used at a cost of $0.30 per ounce. 7,390 direct labor hours were worked at a total cost of $53,947 Requirement 1: Compute the direct material price, quantity and overall variance for the month of April. Specify favorable or unfavorable for all variances. You may round your variances to whole dollars, if applicable. You MUST show all your work for possible credit. Requirement 2: Compute the direct labor rate, efficiency, and overall variance for the month of April. Specify favorable or unfavorable for all variances. You may round your variances to whole dollars, if applicable. You MUST show all your work for possible credit.

Answer 1

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Rawlings Company	Finished Units	Input per unit	Input required	Rate per unit	Amount
Answer 1
Direct Material Variance
Standard Price allowed for Actual Output at Standard Price	5,300.00	7.00	37,100.00	0.33	12,243.00	A
Actual Quantity of Input used at Standard Price			38,000.00	0.33	12,540.00	B
Actual cost of materials			38,000.00	0.30	11,400.00	C
Quantity Variance (B-A)					297.00	Unfavorable
Price Variance (C-B)					(1,140.00)	Favorable
Total Material Variance (C-A)					(843.00)	Favorable
Answer 2
Direct Labor Variance
Standard Hours allowed for Actual Output at Standard Rate	5,300.00	1.30	6,890.00	7.00	48,230.00	D
Actual Hours of Input, at Standard Rate			7,390.00	7.00	51,730.00	E
Actual Hours of Input, at Actual Rate			7,390.00		53,947.00	F
Efficiency Variance (E-D)					3,500.00	Unfavorable
Price Variance (F-E)					2,217.00	Unfavorable
Total Labor Variance (F-D)					5,717.00	Unfavorable