(sO 2,3) Calculate variances and identify significant P12-53B Sasha Clothiers is
ID: 2553292 • Letter: #
Question
(sO 2,3) Calculate variances and identify significant P12-53B Sasha Clothiers is a small company that manufactures oversize suits. The company accounting system. In May 2016, it produced 11,200 suits. uses a standard cost The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labour hours. All materials purchased were used variances. Cost Element Direct materials Direct labour Overhead Standard (per unit 8 m at $4.40 per metre 1.2 hours at $13.40 per hour 1.2 hours at $6.10 per hour Actual $375,575 for 90,500 m ($4.15 per metre) $200,220 for 14200 hours (S14.10 per hour) $49,000 fixed overhead (fixed $3.50; variable $2.60) $37,000 variable overhead Overhead is applied based on direct labour hours. At normal capacity, the budgeted fixed overhead costs are $49,000, and the budgeted variable overhead is $36,400Explanation / Answer
Req A: Std material qty allowed (11200*8): 89600 units Std price per unit: 4.40 Actual quantity: 90500 units Actual price :4.15 Std labouur hours :(11200*1.2)::13440 houors Std rate per hour: 13.40 Actual hours: 14200 hours Actual rate per hour: 14.10 Material price: Actual qty (Std price-Actual price) 90500 (4.40-4.15): $22625 F Material Qty variance: Std Price(Std Quantity-Actual Quantity) 4.40 (89600-90500):3960 U Labour Rate variance: Actual Hours (Std rate-Actual rate) 14200 (13.40-14.10): $9940 U Labour Effciency Variance = STd rate (Std hours-Actual Hours) 13.40 (13440-14200):10,184 U Req b: Budgeted Overhads (14000*6.10) 85400 Std Overheads (11200*1.20 @ 6.10) 81984 Actual Overheads (49000+37000) 86000 Overheads Budget Variance: Budgeted OH -Actual OH 85400-86000 = 600 U Overheads Volume Varaince: Sstd Overheads-Budgeted Variance 81984-85400 = 3416 U Req C: The following Variance shall be Investigated: Material Price variance Labour rate variannce Labour Efficiency Variance
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