In: Accounting
The Chair Company produces chairs and has determined the
following direct
cost categories and budgeted amounts:
Standard Inputs Standard Cost
for 1 output per input
Direct Materials 1.00 $7.50
Direct Labor 0.30 $9.00
Direct Marketing 0.50 $3.00
Actual performance for the company is shown below:
Actual output: (in units) 4,000
Direct Materials:
Materials costs $30,225
Input purchased and used 3,900
Actual price per input $7.75
Direct Manufacturing Labor:
Labor costs $11,470
Labor-hours of input 1,240
Actual price per hour $9.25
Direct Marketing Labor:
Labor costs $5,880
Labor-hours of input 2,100
Actual price per hour $2.80
3
a. What is the flexible-budget variance of the direct materials? Is
it F or U?
b. What is the flexible-budget variance of the direct manufacturing
labor? Is it F or U?
c. What is the flexible-budget variance of the direct marketing
labor? Is it F or U?
d. What is the price variance of the direct materials? Is it F or
U?
e. What is the price variance of the direct manufacturing labor? Is
it F or U?
f. What is the price variance of the direct marketing labor? Is it
F or U?
g. What is the efficiency variance for the direct materials? Is it
F or U?
h. What is the efficiency variance for the direct manufacturing
labor? Is it F or U?
i. What is the efficiency variance for the direct marketing labor?
Is it F or U?
3a)Standard material cost allowed for actual output =Actual output * SQ*SR
= 4000*1* 7.5
= 30000
flexible-budget variance of the direct materials = Actual Material cost- Standard material cost alllowed for actual output
= 30225 -30000
= 225 U
b)Standard manufacturing labor cost allowed for actual output = Actual output *SH*SR
= 4000 * .30 *9
= 10800
flexible-budget variance of the direct manufacturing labor =Actual manufacturingLabor cost - Standard manufacturing labor cost allowed for actual output
= 11470- 10800
= 670 U
C)
Standard marketing labor cost allowed for actual output = Actual output *SH*SR
= 4000* .50 *3
= 6000
flexible-budget variance of the direct marketing labor = Actual marketing labor cost- Standard marketing labor cost allowed for actual output
= 5880-6000
= - 120 F (enter as 120 F if needs to be entered as positive value)
d)
price variance of the direct materials =AQ [AR-SR]
= 3900 [7.75 7.50 ]
= 3900 * .25
= 975 U