In: Accounting
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.)
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) | |||||||