Question

Stratton, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows.

		Standard Price		Standard Quantity			Standard Cost
Direct materials		$3 per yard		2.00	yards		$6.00
Direct labor		$14 per DLH		0.75	DLH		10.50
Variable overhead		$3.2 per DLH		0.75	DLH		2.40
Fixed overhead		$3 per DLH		0.75	DLH		2.25
							$21.15

Sandy Robison, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Sandy asked CFO Suzy Summers for more information. She provided the following overhead budgets, along with the actual results for November.

The company purchased and used 82,000 yards of fabric during the month. Fabric purchases during the month were made at $2.8 per yard. The direct labor payroll ran $457,375, with an actual hourly rate of $12.5 per direct labor hour. The annual budgets were based on the production of 600,000 shirts, using 450,000 direct labor hours. Though the budget for November was based on 45,000 shirts, the company actually produced 42,500 shirts during the month.

		Variable Overhead Budget
		Annual Budget		Per Shirt		November—Actual
Indirect material		$720,000		$1.2		$52,900
Indirect labor		450,000		0.75		31,400
Equipment repair		180,000		0.3		13,700
Equipment power		90,000		0.15		6,500
Total		$1,440,000		$2.40		$104,500

		Fixed Overhead Budget
		Annual Budget		November—Actual
Supervisory salaries		$430,000		$37,200
Insurance		140,000		11,500
Property taxes		60,000		5,000
Depreciation		245,000		21,300
Utilities		225,000		18,000
Quality inspection		250,000		22,400
Total		$1,350,000		$115,400

(a) Calculate the direct materials price and quantity variances for November. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Direct material price variance	$enter the direct material price variance in dollars	select an option                                                          Favorable/Unfavorable/Not Applicable
Direct material quantity variance	$enter the direct material quantity variance in dollars	select an option                                                          Unfavorable/Favorable/Not Applicable

(b) Calculate the direct labor rate and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Direct labor rate variance	$enter the direct labor rate variance in dollars	select an option                                                          UnfavorableFavorableNot Applicable
Direct labor efficiency variance	$enter the direct labor efficiency variance in dollars	select an option                                                          Not ApplicableUnfavorableFavorable

(c) Calculate the variable overhead spending and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Variable overhead spending variance	$enter the variable overhead spending variance in dollars	select an option                                                          Unfavorable/Favorable/Not Applicable
Variable overhead efficiency variance	$enter the variable overhead efficiency variance in dollars	select an option                                                          Favourable/Unfavourable/Not Applicable

(d) Calculate the fixed overhead spending variance for November. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Fixed overhead spending variance

$enter the fixed overhead spending variance in dollars

select an option                                                          Unfavorable/Favorable/Not Applicable

Answer 1

	Formula material Price Variance		(Standard Price - Actual Price)*Actual Qty.
a	material Price Variance	=	(3 - 2.80)*82,000
		=	16,400	Favorable
		=		Favorable
	Formula material Qty. Variance		(Standard Qty- Actual Qty.)*Standard Price
	material Qty. Variance	=	((42,500*2.00 - 82,000))*3
	material Qty. Variance	=	9,000	favorable
		=
b	Labor rate Variance	=	(standard Rate- Actual rate)*Actual hours
			(14-12.5)*457,375/12.5
			54,885	favorable
	Labor Efficiency Variance	=	(Standard Hour - Actual Hour)*Standard rate
	Labor Efficiency Variance	=	(42,500 *0.75 - 457,375/12.5)*14
		=	66,010	Unfavorable
		=
c	Variable overhead spending variance		(Standard rate*Actual units)- - Actual variable Overhead cost
			(2.40*42,500-104,500)
			2,500	Unfavorable
	Variable overhead Efficiency variance		(Standard Hour - Actual Hour)*Standard rate
			(42,500 *0.75 - 457,375/12.5)*3.2
			15,088	Unfavorable
d	Fixed Overhead Spending Variance		Budgeted Fixed Overhead - Actual Fixed Overhead)
			(1,350,000/14-115,400)
			18,971	Unfavorable

I HOPE IT USEFUL TO YOU IF YOU HAVE ANY DOUBT PLZ COMMENT GIVE ME UP-THUMB. THANKS....