Ramsey Fabrics manufactured 500 units of a special multilayer fabric with the tr
ID: 2536969 • Letter: R
Question
Ramsey Fabrics manufactured 500 units of a special multilayer fabric with the trade name style. The following information from the style product department.
Direct materials purchased: 18, 000 meters at RM1.38 per meter RM 24,840
Direct materials used: 9,500 at RM 1.38per meter 13,110
Direct labor: 2,100 hours at RM9.15 per hour. 19,215
The standard prime cost for one unit of style are as follow:
Direct materials: 20 meters at RM1.35 per meterRM27.00
Direct labor: 4 hours at RM8.90 per hour36.00
Total standard prime cost per unit RM63.00
Required:
Compute the following variances, indicating whether each variance is favorable or unfavorable.
Total of direct- material variances.
Direct-material price variance.
Direct-material usage variance.
Total of direct-labor variances.
Direct-labor rate variance.
Direct-labor efficiency variance.
Explanation / Answer
Solution
SQ =
Standard Quantity for Actual Production
SP =
Standard Price
AQ =
Actual Quantity
AP =
Actual Price
SH =
Standard Hours for Actual Production
SR =
Standard Rate
AH =
Actual Hours
AR =
Actual Rate
Computation of Material variances
1
2
3
SQxSP
AQxAP
SQxAP
10000 x 1.35
9500 x 1.38
10000 x 1.38
13500
13110
13800
SQ =
20 Materx 500 =
10000
Meters
Total Direct Material variance (1-2) =
390
(Favourable)
Direct-material price variance (3-2) =
690
(Favourable)
Direct-material usage variance (1-3) =
-300
(Adverse)
Computation of Labour variances
1
2
3
SHxSR
AHxAR
SHxAR
2000 x 8.90
2100 x 9.15
2000 x 9.15
17800
19215
18300
SH =
4 x 500
2000
Hours
Total of direct-labor variances (1-2)=
-1415
(Adverse)
Direct-labor rate variance. (3-2)=
-915
(Adverse)
Direct-labor efficiency variance(1-3)=
-500
(Adverse)
Solution
SQ =
Standard Quantity for Actual Production
SP =
Standard Price
AQ =
Actual Quantity
AP =
Actual Price
SH =
Standard Hours for Actual Production
SR =
Standard Rate
AH =
Actual Hours
AR =
Actual Rate
Computation of Material variances
1
2
3
SQxSP
AQxAP
SQxAP
10000 x 1.35
9500 x 1.38
10000 x 1.38
13500
13110
13800
SQ =
20 Materx 500 =
10000
Meters
Total Direct Material variance (1-2) =
390
(Favourable)
Direct-material price variance (3-2) =
690
(Favourable)
Direct-material usage variance (1-3) =
-300
(Adverse)
Computation of Labour variances
1
2
3
SHxSR
AHxAR
SHxAR
2000 x 8.90
2100 x 9.15
2000 x 9.15
17800
19215
18300
SH =
4 x 500
2000
Hours
Total of direct-labor variances (1-2)=
-1415
(Adverse)
Direct-labor rate variance. (3-2)=
-915
(Adverse)
Direct-labor efficiency variance(1-3)=
-500
(Adverse)
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