Warrier Gear manufactures clothing. A flannel shirt requires the following: Stan

Question

Warrier Gear manufactures clothing. A flannel shirt requires the following:

Standard Direct Materials 2 square yards at $15 per yard

Standard Manufacturing Labor 1.5 hours at $25 per hour

During the third quarter, the company made 1,500 shirts and used 3,200 square yards of fabric costing $44,800. Direct labor totaled 2,100 hours for $56,700.

Required: (A) Compute the direct materials price and efficiency variances for the quarter. (B) Compute the direct manufacturing labor price and efficiency variances for the quarter. (c) Describe 2 possible reasons for each variance. Show all computations.

Explanation / Answer

Std Material Qty allowed (1500*2): 3000 sq. yards Std price: 15 per yeard Actual Material Qty: 3200 sq. yards Actual Price: (44800/3200) = 14 Material Price variance: Actual Quantity (Std price-Actual price) 3200 ( 15-14) = 3200 Fav Reasons: * The Purchase department has purchased more efficiently through good delas from supplier. *Lower quality might have been purchased. Material Quantity Variance: Std price (Std Qty-Actual Qty) 15 (3000 -3200) = 3000 Unfav Reason: *Production inefficiencies and wastage *Lower quality of material purchased. Std labour hours alloweed (1500*1.50): 2250 hours Std rate per hour: 25 per hour Actual labour hours: 2100 hours Actual Rate per hour: (56700/2100): 27 per hour Labour rate variance: Actual Hours (Std rate-Actual Rrate) 2100 (25-27) = 4200 Unfav Reasons: *Shortage of labour in the market *Labour unions stronger Labour efficiency variance: Std rate (Std hours-Actual hours) 25 (2250- 2100) = 3750 Fav Reasons: * Skiled or experienced workers employed at higher rate. * Favorable production environment.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.