Question

Question 2

Rudd Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2020, 10,100 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used.

Cost Element		Standard (per unit)		Actual
Direct materials		7 yards at $4.70 per yard		$322,200 for 71,600 yards ($4.50 per yard)
Direct labor		1.20 hours at $13.00 per hour		$173,166 for 13,020 hours ($13.30 per hour)
Overhead		1.20 hours at $6.40 per hour (fixed $3.90; variable $2.50)		$49,400 fixed overhead $37,500 variable overhead

Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $54,600, and budgeted variable overhead was $35,000.

(a)

Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.)

(1)		Total materials variance		$		FavorableNeither favorable nor unfavorableUnfavorable
		Materials price variance		$		FavorableNeither favorable nor unfavorableUnfavorable
		Materials quantity variance		$		FavorableNeither favorable nor unfavorableUnfavorable
(2)		Total labor variance		$		Neither favorable nor unfavorableUnfavorableFavorable
		Labor price variance		$		FavorableUnfavorableNeither favorable nor unfavorable
		Labor quantity variance		$		Neither favorable nor unfavorableUnfavorableFavorable

(b)

Compute the total overhead variance.

Total overhead variance

$

FavorableNeither favorable nor unfavorableUnfavorable

Answer 1

(a)

Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.)

(1)		Total materials variance		(10100*7*4.70)-322200 = 10090		Favorable
		Materials price variance		(4.70-4.50)*71600 = 14320		Favorable
		Materials quantity variance		(10100*7-71600)*4.7 = 4230		Unfavorable
(2)		Total labor variance		(10100*1.2*13)-173166 = 15606		Unfavorable
		Labor price variance		(13*13020-173166) = 3906		Unfavorable
		Labor quantity variance		(10100*1.2-13020)*13 = 11700		Unfavorable

(b)

Compute the total overhead variance.

Total overhead variance

(10100*1.2*6.4-86900) = 9332

Unfavorable