Question

Direct Materials

Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $63,101 for 7,090 units of direct materials in the production of 2,175 pairs of shoes.

Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

Actual Cost								Standard Cost
Actual Quantity	X	Actual Price		Actual Quantity	X	Standard Price		Standard Quantity	X	Standard Price
fill in the blank 93a288feb042077_1	X	$fill in the blank 93a288feb042077_2		fill in the blank 93a288feb042077_3	X	$fill in the blank 93a288feb042077_4		fill in the blank 93a288feb042077_5	X	$fill in the blank 93a288feb042077_6
	= $fill in the blank 93a288feb042077_7				= $fill in the blank 93a288feb042077_8				= $fill in the blank 93a288feb042077_9
			Direct Materials   Variance:				Direct Materials   Variance:
			$fill in the blank 93a288feb042077_14				$fill in the blank 93a288feb042077_15
					Total Direct Materials   Variance:
					$fill in the blank 93a288feb042077_18

Direct Labor

Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.80 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,880 for 7,320 hours of direct labor in the production of 2,300 pairs of shoes.

Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.

Actual Cost								Standard Cost
Actual Hours	X	Actual Rate		Actual Hours	X	Standard Rate		Standard Hours	X	Standard Rate
fill in the blank 6942c705e020fb5_1	X	$fill in the blank 6942c705e020fb5_2		fill in the blank 6942c705e020fb5_3	X	$fill in the blank 6942c705e020fb5_4		fill in the blank 6942c705e020fb5_5	X	$fill in the blank 6942c705e020fb5_6
	= $fill in the blank 6942c705e020fb5_7				= $fill in the blank 6942c705e020fb5_8				= $fill in the blank 6942c705e020fb5_9
			Direct Labor   Variance:				Direct Labor   Variance:
			$fill in the blank 6942c705e020fb5_14				$fill in the blank 6942c705e020fb5_15
					Total Direct Labor   Variance:
					$fill in the blank 6942c705e020fb5_18

Budget Performance Report

Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a Budget Performance Report for September. The company produced 3,000 pairs of shoes that required 10,500 units of material purchased at $8.20 per unit and 8,100 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $24,300. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.

Manufacturing Costs	Standard Price	Standard Quantity	Standard Cost Per Unit
Direct materials	$8.40 per unit	3.60 units per pair	$30.24
Direct labor	$8.50 per hour	2.80 hours per pair	23.80
Factory overhead	$2.70 per hour	2.80 hours per pair	7.56
Total standard cost per pair			$61.60

Sole Purpose Shoe Company Budget Performance Report For the Month Ended September 30
Manufacturing Costs	Actual Costs	Standard Cost at Actual Volume	Cost Variance - (Favorable) Unfavorable
Direct materials	$fill in the blank 5974c9068fa2fd9_1	$fill in the blank 5974c9068fa2fd9_2	$fill in the blank 5974c9068fa2fd9_3
Direct labor	fill in the blank 5974c9068fa2fd9_4	fill in the blank 5974c9068fa2fd9_5	fill in the blank 5974c9068fa2fd9_6
Factory overhead	fill in the blank 5974c9068fa2fd9_7	fill in the blank 5974c9068fa2fd9_8	fill in the blank 5974c9068fa2fd9_9
Total manufacturing costs	$fill in the blank 5974c9068fa2fd9_10	$fill in the blank 5974c9068fa2fd9_11	$fill in the blank 5974c9068fa2fd9_12

Answer 1

1. Actual Cost = Actual Quantity*Actual Price= 7,090*$8.90=$63,101

Standard Price= $8.40, Standard Quantity= 3.6*2,175= 7,830

Standard Cost= Standard Quantity*Standard Price= 7,830*$8.40= $65,772

Direct Material Variance Variance= Standard Cost- Actual Cost= $65,772- $63,101= $2,671

2. Actual Labour Cost= Actual Labour Hours*Actual Labour Rate=7,320*$9= $65,880

Standard Labour Rate= $8.50 , Standard Hours= 2.8*2,300= 6,440 Hours

Standard Labour Cost= Standard Hours*Standard Labour Rate= 6,440*$8.50= $54,740

Direct Labour Variance= Standard Labour Cost- Actual Labour Cost= $54,740-$65,880= $11,140

3. Cost Variance= Standard Cost- Actual variance

Standard Quantity= 3,000*3.6= 10,800

Standard Hour= 3,000*2.8 hour= 8,400 hours

	Manufacturing Actual Costs	Standard Cost at Actual Volume	Cost Variance-(Favourable)/ Unfavourable
Direct Material	$86,100 (10,500*$8.20)	$90,720 (10,800*$8.40)	($4,620) [$90,720-$86,100]
Direct Labour	$72,090 (8,100*$8.90)	$71,400 (8,400*$8.50)	$690 ($71,400-$72,090)
Factory Overhead	$24,300	$22,680 (8,400*$2.70)	$1,620 ($22,680-$24,300)
Total Manufacturing Costs	$182,490	$184,800	($2,310)