Sheffield, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems....

Sheffield, 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	$4 per yard	1.50	yards	$6.00
Direct labor	$12 per DLH	0.50	DLH	6.00
Variable overhead	$4 per DLH	0.50	DLH	2.00
Fixed overhead	$6 per DLH	0.50	DLH	3.00
				$17.00

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 80,100 yards of fabric during the month. Fabric purchases during the month were made at $3.90 per yard. The direct labor payroll ran $314,825, with an actual hourly rate of $12.25 per direct labor hour. The annual budgets were based on the production of 45,000 shirts, using 251,000 direct labor hours. Though the budget for November was based on 49,100 shirts, the company actually produced 51,100 shirts during the month.

	Variable Overhead Budget
	Annual Budget	Per Shirt	November—Actual
Indirect material	$446,000	$0.90	$48,700
Indirect labor	304,000	0.60	31,100
Equipment repair	195,000	0.40	20,800
Equipment power	54,000	0.10	7,500
Total	$999,000	$2.00	$108,100

	Fixed Overhead Budget
	Annual Budget	November—Actual
Supervisory salaries	$259,000	$21,400
Insurance	345,000	27,800
Property taxes	84,000	6,800
Depreciation	321,000	25,500
Utilities	213,000	20,000
Quality inspection	281,000	25,300
Total	$1,503,000	$126,800

A. Calculate the direct materials price and quantity variances for November.

B. Calculate the direct labor rate and efficiency variances for November.

C. Calculate the variable overhead spending and efficiency variances for November.

D. Calculate the fixed overhead spending variance for November.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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