Hopkins Clothiers is a small company that manufactures tall-men’s suits. The com
ID: 2454270 • Letter: H
Question
Hopkins Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2014, 10,200 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 16,000 direct labor hours. All materials purchased were used. Cost Element Standard (per unit) Actual Direct materials 10 yards at $4.90 per yard $486,575 for 102,870 yards ($4.73 per yard) Direct labor 1.3 hours at $13.00 per hour $189,124 for 14,030 hours ($13.48 per hour) Overhead 1.3 hours at $6.30 per hour $49,800 fixed overhead (fixed $3.70; variable $2.60) $37,000 variable overhead Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $59,200, and budgeted variable overhead was $41,600.
(a) Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to 0 decimal places, e.g. 125.)
(b) Compute the total overhead variance.
Explanation / Answer
A)material price variance = AQ*AP - AQ *SP
= 486,575 - (102870 * 4.90)
= 486,575 - 504,063
= $ -17488(F)
Material quantity variance = SP* AQ - SP *SQ
= 4.90* 102870 - [4.90*(10 * 10200)]
= 504063 - [4.90 * 102000]
= 504063 - 499800
= $ 4263(U)
Labor price variance = AR*AH - AH*SR
= 189124 - 14030 * 13
= 189124 - 182390
= 6734(U)
Efficiency variance = SR*AH - SR*SH
= 13 *14030 - [13 *(10200*1.3)]
= 182390 - [13* 13260]
= 182390 - 172380
= 10010(U)
B)Total overhead variance = Actual overhead - standard overhead
= 49800+37000 - [59200+ ( 10200*1.3* 2.6)]
= 86800- [59200+ 34476]
= 86800- 93676
=- 16876(F)
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