Pizarro Clothing manufactures embroidered jackets. The company uses a standard cost system to control manufacturing costs. The following data represent the standard unit cost of a jacket:

Fixed overhead in total was budgeted to be $62,900 for each month.
Actual data for November of the current year include the following:
a. Actual production was 13,300 jackets.
b. Actual direct material used was 2.70 square feet per jacket at an actual cost of $4.20 per square foot.
c. Actual direct labor usage of 24,400 hours for a total cost of $241,560.
d. Actual fixed overhead cost was $56,902, while actual variable overhead cost was $20,740.
Requirements
1. Compute the price and quantity variances for direct materials.
2. Compute the rate and efficiency variances for direct labor.
3. Compute the rate and efficiency variances for variable overhead.
4. Compute the fixed overhead budget variance and the fixed overhead volume variance.
5. Company management intentionally purchased superior materials for November production. How did this decision affect the other cost variances? Overall, was the decision wise? Explain.
6. Journalize the usage of direct materials and the assignment of direct labor, including the related variances.

Transcribed Image Text:

$ 12.00 Direct materials (3.0 sq. ft x $4.00 per sq. ft. Direct labor (2.0 hours x $9.60 per hour). Manufacturing overhead: Variable (2.0 hours x $0.66 per hour). Fixed (2.0 hours x $2.30 per hour) Total standard cost per jacket. 19.20 $1.32 $5.92 $ 37.12 4.60