Question

Bowie Sporting Goods manufactures sleeping bags. The manufacturing standards per sleeping bag, based on 5,000 sleeping bags per month, are as follows:

Direct material of 6.00 yards at $5.50 per yard

Direct labor of 2.50 hours at $20.00 per hour

Overhead applied per sleeping bag at $15.00

In the month of April, the company actually produced 5,200 sleeping bags using 27,300 yards of material at a cost of $5.30 per yard. The labor used was 11,700 hours at an average rate of $20.50 per hour. The actual overhead spending was $96,200.

Determine the total materials variance and round to the nearest whole dollar. Enter a favorable variance as a negative number. Enter an unfavorable variance as a positive number.

Answer 1

Ans.	Total materials variance = Actual cost -   Standard cost
	$144,690 - $171,600
	-$26,910	favorable
	*Standard quantity = Actual output * Standard quantity per unit of output
	5,200 * 6 yards
	31,200 yards
	*Standard cost   = Standard quantity * Standard price
	31,200 * $5.50
	$171,600
	*Actual cost   = Actual quantity * Actual price
	27,300 * $5.30
	$144,690
	*If the standard cost is higher than the actual it means the variance is favorable.
	*If the standard cost is less than the actual it means the variance is unfavorable.