Question

Problem 26-03A a-b (Video) Rudd Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2020, 10,600 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 13,000 direct labor hours. All materials purchased were used. Cost Element Actual Direct materials Direct labor Overhead Standard (per unit) 6 yards at $4.00 per yard 1.10 hours at $14.00 per hour 1.10 hours at $6.20 per hour (fixed $3.50; variable $2.70) $243,960 for 64,200 yards ($3.80 per yard) $182,120 for 12,560 hours ($14.50 per hour) $49,100 fixed overhead $37,500 variable overhead Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $45,500, and budgeted variable overhead was $35,100. (a) Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.) (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

Answer 1

Working Note:

1.

(i) Total Materials Variance

Total MaterialVariance = $254400 – $243960

Total MaterialVariance $10440 Favourable

(ii) Material Price Variance

(iii) Material Quantity Variance

MaterialQuantityVariance = -600X$4

2.

(i) Total Labor Variance

(ii) Labor Price Variance

(iii) Labor Quantity Variance

3. Total Overhead Variance

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Answer 2

Working Note:

1.

(i) Total Materials Variance

Total MaterialVariance = $254400 – $243960

Total MaterialVariance $10440 Favourable

(ii) Material Price Variance

(iii) Material Quantity Variance

MaterialQuantityVariance = -600X$4

2.

(i) Total Labor Variance

(ii) Labor Price Variance

(iii) Labor Quantity Variance

3. Total Overhead Variance

Thanks!

Please drop an upvote if you find this helpful.