Hopkins Clothiers is a small company that manufactures tall-men\'s suits. The co
ID: 2464948 • 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, 10,100 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 13,000 direct labour hours. All materials purchased were used. Overhead is applied on the basis of direct labour hours. At normal capacity, budgeted fixed overhead costs were $52,000, and budgeted variable overhead was $32,500. Compute the total, price, and quantity variances for (1) materials and (2) labour. (Round answers to 0 decimal places, e.g. 125.) Compute the total overhead variance.Explanation / Answer
1.Total material variance = material price variance + material quantity variance
= -13528 +( -2350) = 15878 favourable
Material price variance = Actual Quantity * Actual price - Actual quantity * standard price
= 71200 * 4.51 - 71200 * 4.70
= 321112 - 334640 = 13528 Favourable
Material quantity variance = [ Standard quantity - Actual quantity] * Standard price
= [10100 *7 - 71200 ] * 4.70
= 2350 Favourable
2. Total labor variance = Labor price variance + Labor quantity variance
= 4504.5 +(-9750) = 5245.5 favourable.
Labor price variance = Actual quantity * actual rate - actual quantity * standard rate
= 12870 * 13.35 - 12870 * 13
= 171814.5 - 167310
= 4504.5 Adverse
Labor quantity variance = [ standard hours - actual hours ] * standard rate
= [ 10100 * 1.2 - 12870 ] * 13
= [ 12120 - 12870] * 13
= 9750 Favourable
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