Question

% P23-32B (similar to) SoundSmart manufactures headphone cases. During September 2018, the company produced and sold 107,000 cases and recorded the following costdata: Click the icon to view the cost data) Read the requirements Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor Begin with the col variances Select the required formulas, compute the cost variances for direct materials and direct labor, and ently whether each variance is favorable (F) or unfavorabile (U) (Abbreviations Formu Direct materials cost variance Data Table rect labor cost variance Standard Cost Information 5 Dr Mata Direct Variable Mandaring Over Quantity 2 parts 0.02 hours 002 hours 0.15 per part 7.00 per hour 1100 per hour Feed Manufactug Overhead (2.900 for sale budget volume 92.000 1900 honor 517 per hour Actual Cost Information 270.000 1 hours 0 20 percant 52 .000 to be Montering Over ed Mahal be the ot h eek

Answer 1

For calculating variances, first we have to calculate standard cost information in terms of actual data.

Actual cases sold = 107,000 cases

Standard parts of direct materials required for 1 case = 2 parts

Standard parts of direct materials required for 107,000 case = 2 parts * 107,000 cases = 214,000 parts

Actual parts used = 210,000 parts

Standard cost for Direct materials = $0.15 per part

Actual cost for Direct materials = $0.20 per part

Direct materials cost variance = Standard cost for actual data - Actual cost incurred = ( 214,000 parts * $0.15 per part ) - ( 210,000 parts * $0.20 per part) = $9,900 (unfavorable)

Standard direct labor hours required for 1 case = 0.02 hours

Standard direct labor hours required for 107,000 case = 0.02 hours * 107,000 cases = 2,140 hours

Actual labor hours used = 1,640 hours

Standard cost for Direct labor hours = $7 per hour

Actual cost for for Direct labor hours = $7.10 per hour

Direct labor cost variance = Standard cost for actual data - Actual cost incurred = ( 2,140 hours * $7 ) - ( 1,640 hours * $7.10 per hour) = $3,336 (favorable)