Benchmarking:

The management of the Hampshire Company would like to implement benchmarking. Standard costs have been established and are presented below. You will want to complete a variance analysis to include efficiency and price variances for materials (cloth and handle assemblies) and labor based on the following data:

Units produced = 80,000

Units sold = 60,000

Direct Materials Purchased and UsedActual yards of cloth purchased and used: 128,000

Actual price incurred per yard: $1.25

Actual handles purchased and used: 80,808

Actual price per handle/rib/stretcher assembly: $0.99

Direct Manufacturing Labor Used

Actual direct labor hours used: 15,748

Actual price per hour: $7.62

Direct Labor costs: $120,000

Standard Rates

Standard labor hours

Actual handles purchased and used: 80,808

Actual price per handle/rib/strectcher assembly: $0.99

Direct Manufacturing Labor Used

Actual direct labor hours used: 15,748

Actual price per hour: $7.62

Direct Labor costs: $120,000

Actual Standard Actual Quantity Variance Favorable or Unfavorable

Cloth

Handle Assembly

Labor Variance

Requirement 2

Efficiency Variances:

Actual Standard Standard Price Variance Favorable or Unfavorable

Cloth

(1.5 yard per unit)

Handle Assembly

(1 per unit)

Labor

(.20 per unit)

Standard Rates

Standard labor: per unit: $0.20

Standard labor price per hour: $7.50

Yards material per unit: 1.50

Standard price per yard: $1.15

Handle/rib/stretcher assembly per unit: 1

Standard price per handle assembly: $1.05

Calculate price variances for material and labor and denote whether they are favorable or unfavorable

Calculate efficiency variances for material and labor and denote whether they are favorable or unfavorable