Benchmarking

Units Produced = 80,000

Units Sold = 60,000

Direct Materials Purchased and Used

Actual square 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 per unit: 0.20

Standard labor price per hour: $7.50

Square 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. DONE:

	Actual	Standard	Actual Quantity	Variance	Favorable or Unfavorable
Cloth	$1.25	$1.15	128,000	$12,800.00	Unfavorable
Handle Assembly	$0.99	$1.05	80,808	-$4,848.48	Favorable
Labor Price Variance	$7.62	$7.50	15,748	$1,889.76	Unfavorable

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

	Actual	Standard	Standard Price	Variance	Favorable or Unfavorable
Cloth	128,000	120,000	$1.15	$9,200.00	Unfavorable
(1.5 Yards per Unit)
Handle Assembly	80,808	80,000	$1.05	$848.40	Unfavorable
(1 per Unit)
Labor	15,748	16,000	$7.50	-$1,890.00	Favorable
(.20 per Unit)

PLEASE ANSWER:

C. Which benchmarking method should management adopt and why?