al Its Data Table More Info Static Budget 500 Number of jacket lots (1 lot = 1 dozen) Per Lot of Jackets: nce Direct materials Direct manufacturing labor Actual Results 13 yards at $1.80 per yard = $23.40 2.1 hours at $8.10 per hour = $17.01 Nancy Ann has a policy of analyzing all input variances when they add up to more than 8% of the total cost of materials and labor in the flexible budget, and this is true in May 2017. 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 standards are fine." ares 525 the Number of jacket lots sold Total Direct Inputs: Print Done ved Direct materials 7,875 yards at $2.00 per yard = $15,750.00 998 hours at $8.20 per hour = $8,183.60 ned Direct manufacturing labor erior quality and feel, Nancy Ann should not continue to use the new material in light of the un he-time occurrence. Nancy Ann should continue to use the new material, especially in light of i oved rd Print Done ved the material. Use of the new material would require a change to the standard material price since Nancy Ann, Inc. designs and manufactures fleece quarter-zip jackets. It sells its jackets to brand-name outdoor Outfitters in lots of one dozen. Nancy Ann's May 2017 static budget and actual results for direct inputs are as follows: (Click the icon to view the data.) A (Click the icon to view additional information.) Read the requirements. Requirement 1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2017. 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? Begin by calculating the direct materials and direct manufacturing labor price and efficiency variances in May 2017. Complete the actual results, price variance, and cost columns, then the efficiency variance and flexible budget columns. Label each variance as favorable or unfavorable. (Round all answers to the nearest cent.) Actual Price Efficiency Flexible Actual Input Qty x Budgeted Price May 2017 Results Variance Variance Budget Units Direct materials Direct labor Total variance The total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined is $ This variance is % of the total cost of direct materials and direct manufacturing labor in the flexible budget. (Round the variance to the nearest cent and the percentage to two decimal places, X.XX%.) Requirement 2. Comment on the May 2017 results. Would you continue the "experiment" of using the new material? O A. Efficiencies have improved in the direction indicated by the production manager. Nancy Ann should not continue to use the new material, though, since the overall efficiency variance is still unfavorable. O B. Efficiencies have declined although the production manager had indicated they would improve. Although the new material has superior quality and feel, Nancy Ann should not continue to use the new material in light of the unfavorable efficiencies. O C. Efficiencies have improved in the direction indicated by the production managerbut, it is unclear whether they are a trend or a one-time occurrence. Nancy Ann should continue to use the new material, especially in light of its superior quality and feel; but it may want to re-examine the standard material price since the new material costs more than the old. OD. Efficiencies have improved in the direction indicated by the production manager but Nancy Ann should not continue to use the new material. Use of the new material would require a change to the standard material price since the new material costs more than the old Making this change to the cost accounting system is complex and very expensive
