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Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 26,800 yards...

Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 26,800 yards of fabric costing $3.05 per yard and incurring direct labor costs of $18,639 for 3,270 hours of direct labor. The standard cost per pillowcase assumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour. a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases in May. b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May. (For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round your answers to 2 decimal places.) Loading...

Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 26,800 yards of fabric costing $3.05 per yard and incurring direct labor costs of $18,639 for 3,270 hours of direct labor. The standard cost per pillowcase assumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour.

a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases in May.

b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May.

(For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)


Solutions

Expert Solution

  • All working forms part of the answer
  • Working

Actual DATA for

15000

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct Material

26800

$              3.050

$           81,740.00

Direct labor

3270

$                5.70

$           18,639.00

Standard DATA for

15000

units

Quantity (SQ)

Rate (SR)

Standard Cost

[A]

[B]

[A x B]

Direct Material

( 1.75 yards x 15000 units)=26250 yards

$                   3.10

$       81,375.00

Direct labor

( 0.2 hours x 15000 units)=3000 hours

$                   5.95

$       17,850.00

  • Requirement ‘a’

Material Price Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Quantity

(

$                        3.10

-

$                       3.05

)

x

26800

1340

Variance

$              1,340.00

Favourable-F

Material Quantity Variance

(

Standard Quantity

-

Actual Quantity

)

x

Standard Rate

(

26250

-

26800

)

x

$                           3.10

-1705

Variance

$              1,705.00

Unfavourable-U

  • Requirement ‘b’

Labor Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                        5.95

-

$                       5.70

)

x

3270

817.5

Variance

$                  817.50

Favourable-F

Labour Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

3000

-

3270

)

x

$                           5.95

-1606.5

Variance

$              1,606.50

Unfavourable-U

ekkarill92 answered 4 months ago
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