Question

Sole Purpose Shoe Company

Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.

Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.6 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

A variance that occurs when the actual cost is less than standard cost.

, and a positive number for an unfavorable cost variance

A variance that occurs when the actual cost exceeds the standard cost.

.

Actual Cost								Standard Cost
Actual Quantity	X	Actual Price		Actual Quantity	X	Standard Price		Standard Quantity	X	Standard Price
	X				X
	=				=				=
			selector 1 Favorable Unfavorable Direct Materials selector 2 Price Rate Cost Quantity Time Variance:				selector 3 Favorable Unfavorable Direct Materials selector 4 Price Cost Rate Time Quantity Variance:
					selector 5 Favorable Unfavorable Total Direct Materials selector 6 Price Cost Time Rate Quantity Variance:
You are in Column Actual Cost	You are in Column Actual Cost	You are in Column Actual Cost						You are in Column Standard Cost	You are in Column Standard Cost	You are in Column Standard Cost

Points:

0 / 18

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Review Exhibit 6

Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.8 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,148 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
	X				X
	=				=				=
			selector 1 Favorable Unfavorable Direct Labor selector 2 Cost Time Price Rate Quantity Variance:				selector 3 Favorable Unfavorable Direct Labor selector 4 Cost Quantity Time Rate Price Variance:
					selector 5 Unfavorable Favorable Total Direct Labor selector 6 Time Rate Price Cost Quantity Variance:
You are in Column Actual Cost	You are in Column Actual Cost	You are in Column Actual Cost						You are in Column Standard Cost	You are in Column Standard Cost	You are in Column Standard Cost

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0 / 18

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Review Exhibit 7 in the text.

Shaded cells have feedback.

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

A report comparing actual results with budget figures.

for September. The company produced 2,500 pairs of shoes that required 8,750 units of material purchased at $8.20 per unit and 6,750 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $21,000. 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	3.6 units per pair	$30.24
Direct labor	$8.50 per hour	2.8 hours per pair	23.80
Factory overhead	$2.80 per hour	2.8 hours per pair	7.84
You are in Column Manufacturing Costs Total standard cost per pair	You are in Column Standard Price	You are in Column Standard Quantity	$61.88You are in Column Standard Cost Per Unit

Question not attempted.

Score: 0/48

Sole Purpose Shoe Company

Budget Performance Report

For the Month Ended September 30

1	Manufacturing Costs	Actual Costs	Standard Cost at Actual Volume	Cost Variance - (Favorable) Unfavorable
2	Direct materials
3	Direct labor
4	Factory overhead
5	Total manufacturing costs

Solution

Sole Purpose Shoe Company

Budget Performance Report

For the Month Ended September 30

1	Manufacturing Costs	Actual Costs	Standard Cost at Actual Volume	Cost Variance - (Favorable) Unfavorable
2	Direct materials
3	Direct labor
4	Factory overhead
5	Total manufacturing costs

Points:

0 / 12

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Check My Work

Review Exhibit 3 and computations for the amounts in the report.

in the text.

Answer 1

Actual Cost								Standard Cost
Actual Quantity	X	Actual Price		Actual Quantity	X	Standard Price		Standard Quantity	X	Standard Price
7,090	X	8.9		7090	X	$8.40		6,525(2,175 x3)	X	8.40
	=	$63,101			=	59,556			=	54,810
			Material price variance =63101-59556 3,545 Unfavorable				Material quantity variance =59556-54810 4,746 Unfavorable
					Total Material variance=Material price variance + Material quantity variance =3,545+4,746 8,291 Unfavorable

Actual Cost								Standard Cost
Actual Hours	X	Actual Rate		Actual Hours	X	Standard Rate		Standard Hours	X	Standard Rate
7,320	X	8.9		7320	X	8.5		6,440(2,300 x 2.8)	X	$8.50
	=	$65,148			=	62,220			=	54,740
			Labor rate variance =65148-62220 =2,928 Unfavorable				Labor Efficiency Variance =62220-54740 7,480 Unfavorable
					Total labor variance =Rate variance + Efficiency Variance =2928+7480 =10,408 Unfavorable

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	71750	75600	-3850	F
	(8750*8.2)	(2500*3.6*8.4)
Direct labor	60075	59500	575	U
	(6750*8.9)	(2500*2.8*8.5)
Factory overhead	$21,000	19,600	1,400	U
		(2500*2.8*2.8)
Total manufacturing costs	152,825	154700	−1,875	F

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