Richetti Band Uniforms uses a standard costing system. The standard material and labor costs for producing a marching band hat are as follows:
Materials (0.90 yards × $11.70) | $10.53 | ||
Direct labor (1.20 hours × $13.30) | $15.96 |
During May, the company produced 3,770 band hats; 4,400 yards of
material were purchased for $42,240, and 3,270 yards of material
were used in production. Also during May, 4,790 direct labor hours
were worked at a cost of $57,480. Calculate material price and
quantity variances and labor rate and efficiency variances.
Indicate whether the variances are favorable or unfavorable.
(Round intermediate calculations to 2 decimal places,
e.g. 15.25 and final answers to 0 decimal places, e.g. 125. Enter
all variances as a positive number.)
Material Price Variance | $ |
FavorableNeither Unfavorable nor FavorableUnfavorable |
|||
Material Quantity Variance | $ |
FavorableNeither Unfavorable nor FavorableUnfavorable |
|||
Labor Rate Variance | $ |
Neither Unfavorable nor FavorableUnfavorableFavorable |
|||
Labor Efficiency Variance | $ |
Neither Unfavorable nor FavorableUnfavorableFavorable |
Materials Price Variance = (SP-AP) *AQ = (11.70 - 42240/4400) * 4400 = 9240 Favourable |
|
Materials Quantity Variance = (SQ - AQ) * SP = (3770*0.90 - 3270)*11.70 = 1439 Favourable |
|
Labor Rate Variance = (SR-AR) *AH = (13.30 - 57480/4790),4790 = 6227 Favourable |
|
Labor efficiency variance = (SH-AH) * SR = (3770*1.20 - 4790)*13.30 = 3538 Unfavorable |
Note that I have rounded some numbers. Comment if you face any issues
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