Divertido Company produces single-colored T-shirts. Materials for the shirts are dyed in large vats. After dying the

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Divertido Company produces single-colored T-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:

Direct materials............................... (2.4 lbs. @ $0.95) $2.28
Direct labor........................................ (0.75 hr. @ $7.40) 5.55
Standard prime cost...................................................... $7.83

During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:

Direct materials............................................ $ 63,000
Direct labor....................... $163,385 (for 22,450 hrs.)


Required:
Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.

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Managerial Accounting The Cornerstone Of Business Decision Making

ISBN: 9780357715345

8th Edition

Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

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