Question

E23-19 (similar to) Question Help Deluxe Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 146,000 square feet of extruded vinyl purchased at $1.10 per square foot. Production required 450 direct labor hours that cost 512 50 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.15 per square foot. The labor standard was 0.027 dired labor hour per fender, at a standard cost of $11.50 per hour Read the requirement Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used. AC = actual cost, AQ = actual quantity, FOH = faced overhead, SC = standard cost, SQ = standard quantity) . Formula Variance N Direct materials cost variance L Direct labor cost variance = = LL

Answer 1

Direct Material Cost Variance = Actual Cost - Standard Cost
= (146000 x $1.10) - (20000 x 7 x $1.15) = $400 (F)

Direct Labor Cost variance = Actual Cost - Standard Cost
= (450 x $12.50) - (20000 x 0.027 x $11.50) = $585 (F)