Sparty Gear, Inc. manufacturers canvas tents for tailgating. The company uses a

Question

Sparty Gear, Inc. manufacturers canvas tents for tailgating. The company uses a standard costing system and applies overhead on the basis of direct labor hours. Sparty Gear provides the following information about this product: Standards: Direct material 21.0 yards of canvas per tent at $12.00 per yard Direct labor 4.0 hours per tent at $12.00 per hour Variable manufacturing overhead (MOH) standard rate $4.60 per direct labor hour Predetermined fixed MOH standard rate $10.20 per direct labor hour Total budgeted fixed MOH cost $81,100 Actual cost data from the most recent month: Purchased 43,480 yards of canvas at a total cost of $647,550 Used 38,800 yards of canvas in producing 2,100 tents Actual direct labor cost of $81,056 for a total of 8,090 hours Actual variable MOH cost $44,670 Actual fixed MOH cost $79,900 There are a total of eight questions below, each worth 0.5 points. Carry your answers to four decimal places. 1. Calculate direct material variances. Enter as a positive if favorable and negative if unfavorable. a. Direct material price variance: b. Direct material quantity variance: Submit Answer Tries 0/10 2. Calculate direct labor variances. Enter as a positive if favorable and a negative if unfavorable. a. Direct labor rate variance: b. Direct labor efficiency variance: Submit Answer Tries 0/10 3. Calculate variable manufacturing overhead (MOH) variances. Enter as a positive if favorable and negative if unfavorable. a. Variable MOH rate variance: b. Variable MOH efficiency variance: Submit Answer Tries 0/10 4. Calculate fixed manufacturing overhead (MOH) variances. Enter as a positive if favorable and negative if unfavorable. a. Fixed overhead budget variance: b. Fixed overhead volume variance:

Explanation / Answer

1)

Direct Material varience

a) Direct material rate varience = SP-AP×AQ

SP=12

AP= 647550÷43480 =14.893

AQ=43480

=12-14.893×43480=125790 U

b) Material quantity varience = SQ-AQ×SP

SQ=2100×21=44100

AQ=38800

SP=12

=44100-38800×12= 63600 F

2)

Direct labour varience  

a)

labour rate varience =SR-AR×AH

SR=12

AR=81056÷8090=10

AH=8090

=12-10×8090= 16180 F

b)

Labour efficiency varience = SH-AH×SR

SH=4×2100=8400

AH=8090

SR=12

=8400-8090×12=3720 F

3)

Variable overhead varience

a) variable overhead rate varience =SR-AR×AH

SR=4.60

AR=44670÷8090=5.54

AH=8090

=4.6-5.54×8090=7605 U

b) Variable overhead efficiency varience = SH-AH×SR

SH=2100×4=8400

AH=8090

SR=4.6

=8400-8090÷4.6= 1426 F

4)

a) Fixed overhead rate varience =SR-AR×AH

SR=10.20

AR=79900÷8090=9.88

AH=8090

=10.20-9.88×8090=2588 F

b) Fixed overhead volume varience = SH-AH×SR

SH=2100×4=8400

AH=8090

SR=10.20

=8400-8090×10.20=3162 F

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