Rudd Clothiers is a small company that manufactures tall-men’s
suits. The company has used a standard cost accounting system. In
May 2017, 10,600 suits were produced. The following standard and
actual cost data applied to the month of May when normal capacity
was 16,000 direct labor hours. All materials purchased were
used.
Cost Element |
Standard (per unit) |
Actual |
||
Direct materials | 10 yards at $4.90 per yard | $501,020 for 106,600 yards ($4.70 per yard) | ||
Direct labor | 1.20 hours at $13.00 per hour | $182,508 for 13,620 hours ($13.40 per hour) | ||
Overhead | 1.20 hours at $6.40 per hour (fixed $3.60; variable $2.80) | $49,200 fixed overhead $36,500 variable overhead |
Overhead is applied on the basis of direct labor hours. At normal
capacity, budgeted fixed overhead costs were $57,600, and budgeted
variable overhead was $44,800.
(a)
Compute the total, price, and quantity variances for (1) materials
and (2) labor. (Round answers to 0 decimal places, e.g.
125.)
(1) | Total materials variance | |||||
Materials price variance | ||||||
Materials quantity variance | ||||||
(2) | Total labor variance | |||||
Labor price variance | ||||||
Labor quantity variance |
(b)
Compute the total overhead variance.
Total overhead variance |
a. 1. Total material variance = 10600*10*4.90 - 501020 = 18380 favorable
Material price variance = (4.90-4.70)*106600 = 21320 favorable
Material quantity variance = (10600*10 - 106600)*4.90 = 2940 unfavorable
2. Total labor variance = 10600*1.2*13 - 182508 = 17148 unfavorable
Labor price variance = (13-13.40)*13620 = 5448 unfavorable
Labor quantity variance = (10600*1.2-13620)*13 = 11700 unfavorable
b. Total overhead variance = 16000*3.60 + 10600*1.20*2.80 - 49200+36500 = 7516 favorable
Rudd Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard...
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