1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2013. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total costs of the direct materials and direct manufacturing labor in the flexible budget?

2. Sally King, the ceo, is concerned about the input variances. But she likes the quality and feel of the new material and agrees to use it for one more year. In May 2014, sallymay again produces 450 lots of tshirts. Relative to May 2013. 2% less direct materials is used, direct material price is down 5%, and 2% less direct manufacturing labor is used. Labor price has remained the same as in May 2013. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2014. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget?

3. Comment on the May 2014 results. Would you continue the experiment of using the new material?

-23 Direct materials and direct manufacturing labor variances. SallyMay, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of one dozen. SallyMay's May 2013 static budget and actual results for direct inputs are as follows Static Budget Number of T-shirt lots (1 lot 1 dozen) 400 : Per Lot of T-shirts Direct materials Direct manufacturing labor 14 meters at $1.70 per meter $23.80 1.6 hours at $8.10 per hour $12.96 Actual Results Number of T-shirt lots sold 450 Total Direct Inputs: Direct materials 6,840 meters at $1.95 per meter $13,338 675 hours at $8.20 per hour $5,535 Direct manufacturing labor SallyMay has a policy of analyzing all input variances when they add up to more than 10% of the total cost of materials and labor in the flexible budget, and this is true in May 2013. The production manager discusses the sources of the variances: "A new type of material was purchased in May. This led to faster cutting and sewing, but the workers used more material than usual as they learned to work with it. For now,the stan- ards are fine." 1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2013. What is the total flexible-budget variance for both inputs (direct materials and direct manufactur- ing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget? 2. Sally King, the CEO, is concerned about the input variances. But she likes the quality and feel of the new material and agrees to use it for one more year. In May 2014, SallyMay again produces 450 lots of T-shirts. Relative to May 2013, 2% less direct material is used, direct material price is down 5%, and 2% less direct manufacturing labor is used. Labor price has remained the same as in May 2013. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2014. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufac- turing labor in the flexible budget? Comment on the May 2014 results. Would you continue the "experiment" of using the new material