ONLY need parts 7 and 8 answered. ONLY need parts 7 and 8 answered. Flexible Bud
ID: 2653172 • Letter: O
Question
ONLY need parts 7 and 8 answered.
ONLY need parts 7 and 8 answered.
Flexible Budgets and Standard Costs Western Fabrics manufacturers a specialty monogrammed blanket. The following are the cost and labor standards for this blanket The foilowing are the cost and labor standards for this Direct material (fabric): 2.0 yards per blanket at $8.50 per yard. Direct labor: 1.5 direct labor hours per blanket at $12.00 per hour. Actual results from last month's production of 1,700 blankets are as follows: Actual cost of 4,590 yards of direct material (fabric) purchased: $35,802 Actual yards of direct material (fabric) used: 3,990 Actual wages for 2,670 direct labor hours worked: $29,904 Requirements 1) What is the standard direct material cost for one blanket? 2) What is the actual cost per yard of fabric purchased? 3) Calculate the direct material price and quantity variances. 4) What is the standard direct labor cost for one blanket? 5) What is the direct labor cost per hour? 6) Calculate the direct labor rate and efficiency variances. 7) Analyze each variance and speculate as to what may have caused that variance. 8) Look at all four variances together (the big picture). How might they all be related? What variance is very likely to have caused the other variances?Explanation / Answer
Actual material rate = 35802/4590 i.e 7.80
Actual labour hours worked = 2670
Actual labour hour rate = 29904/2670 i.e 11.20 per hour
Direct material quantity variance = ( Standard Quantity for actual output - Actual Quantity ) *Standard price
= ( 3400-3990)*8.50 i.e (5015) Unfavourable
Direct Material Price variance = ( Standard price - Actual Price ) * Actual Quantity
= ( 8.50-7.80) *3990 i.e 2793 Favourable
Direct labour rate variance = ( Standard Rate - Actual Rate ) * Actual hours worked
= ( 12-11.20)*2670 i.e 2136 Favourable
Direct labour efficiency variance = ( Standard hours for actual output- Actual hoiurs ) * Standard rate
= ( 2550-2670) *12 i.e ( 1440) Unfavourable
In overall the company is unfavourable as it is not efficient in using the quantity as per the standard set by the company
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