Question

In: Accounting

Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared...

Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given:

Standard Quantity Standard Rate Standard Unit Cost
Shampoo 2.8 oz. $ 0.40 per oz. $ 1.12
Water 26 gal. $ 0.04 per gal. 1.04
Direct labor 1.6 hr. $ 12.00 per hr. 19.20


During the month of July, Collin’s employees gave 460 baths. The actual results were 780 ounces of shampoo used (cost of $405.60), 7,600 gallons of water used (cost of $608), and labor costs for 400 hours (cost of $5,400).

Required:
1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. (Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)



2. Calculate Suds & Cuts direct labor variances for the month of July. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable. Round your answers to nearest dollar amount.)

Solutions

Expert Solution

Particulars Standard actual
qty rate amount qty rate amount
Material - shampoo(2.8*460) 1288 0.4 515.2 780 0.52 405.6
Material - Water (26*460) 11960 0.04 478.4 7600 0.08 608
Labour - (1.6*460) 736 12 8832 400 13.5 5400
Shampoo
Direct material price variance
( std price- actual price)*actual qty = (0.4-0.52)*780
= 93.6 (U)
direct material qty variance
( std qty - actual qty)*std price = (1288-780)*0.4
=203.2 (F)
Water
Direct material price variance
(std price - actual price)*actual qty =(0.04-0.08)7600
=304(U)
direct material qty variance
( std qty- actual qty)*std price = (11960-7600)*0.04
=174.4(F)
Labour
direct labour rate variance
( std rate - actual rate)*actual hour =(12-13.5)*400
=600(U)
Direct labour efficiency variance =(std hour-actual hour)*std rate
=(736-400)*12
=4032(F)

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