Answered step by step
Verified Expert Solution
Question
1 Approved Answer
*($ Actual quantity purchased * Standard price Actual price ) = DM price variance 1,860,000 1.15 $ 1.10 ) = S 93.000 F Determine the
*($ Actual quantity purchased * Standard price Actual price ) = DM price variance 1,860,000 1.15 $ 1.10 ) = S 93.000 F Determine the formula for the direct materials quantity variance, then compute the quantity variance for direct materials Standard price *(Standard quantity allowed Actual quantity used DM quantity variance $ 1.15 * 1,760,000 1,860,000 ) = $ 115,000 U Next, compute the vanances for direct labor. First, determine the formula for the rate variance, then compute the rate variance for direct labor Actual hours x Standard rate Actual rate ) = DL rate variance 4.400 16.00 S 16.50 = $ 2.200 Determine the formula for direct labor the efficiency variance, then compute the efficiency variance for direct labor. Standard rate * Standard hours allowed Actual hours ) = DL efficiency vanance 16.00 * 6,160 4,400 ) = $ 28,160 F Requirement 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. The favorable direct materials price variance combined with the unfavorable direct materials quantity variance suggests that managers may have used higher-quality materials. The net effect is favorable x(s U
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started