Question

Robinson Corporation manufactures embroidered jackets. The company prepares flexible budgets and uses a standard cost system to control manufacturing costs. The following standard unit cost of a jacket is based on the static budget volume of 15,000 jackets per month.

Direct materials (3.0 sq. ft x $5.00 per sq. ft.)

$15.00 Direct labor (2 hours x $12.00 per hour) 24.00

Manufacturing overhead:

-Variable (2 hours x @$1.00 per hour) $2.00

-Fixed (2 hours x $3.00 per hour) 6.00

Total cost per jacket $47.00

Data for November of the current year include the following:

a. Actual production was 16,000 jackets.

b. Actual direct materials usage was 2.80 square feet per jacket at an actual cost of $5.50 per square foot.

c. The amount of actual direct materials purchased was 50,000 square feet.

d. Actual direct labor usage of 33,000 hours cost $429,000.

e. Total actual overhead cost was $117,000; $34,000 was variable.

Use the information above to answer the following:

a) Compute the eight variances

b) Robinson's management intentionally purchased superior materials for November production. How did this decision affect the other cost variances? Overall, was the decision wise? Explain

Answer 1

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