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Bargain Guard, which used a standard cost accounting system, manufactured 220.000 boat fenders during the year using 1640,000 feet of extruded vinyl purchased at $1.15
Bargain Guard, which used a standard cost accounting system, manufactured 220.000 boat fenders during the year using 1640,000 feet of extruded vinyl purchased at $1.15 per foot Production required 4,500 direct labor hours that cost $12.50 per hour. The materials standard was 7 feet of vinyl per fonder at a standard cost of $130 per foot. The labor standard was 0 022 direct labor hour per fender at a standard cost of $12.00 per hour Read the requirements Requirement 1. Compute the price and quantity vanances for direct materials Compute the rate and efficiency variances for direct labor (Enter the vario positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest wholo doilar Label the variances as favorable (F) or untivi CX Abbreviations used DM = Direct materials, DL = Direct labor) Begin with the variances for direct materials. First, determine the formula for the direct materials price variance, then computo the price variance for direct materials (Assume that the quantity of materials purchased is equal to the quantity of materials used) x = DM price variance - X Requirements 1. Compute the price and quantity variances for direct materials Compute the rate and efficiency variances for direct labor Does the pattern of variances suggest that the company's managers have boon making trade-offs? Explain 2
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