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Best Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2016, using 141,000 square feet of extruded vinyl purchased at $1.25 per

Best Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2016, using 141,000 square feet of extruded vinyl purchased at $1.25 per square foot. Production required 400 direct labor hours that cost $16.50 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.30 per square foot. The labor standard was 0.022 direct labor hour per fender, at a standard cost of $15.50 per hour. Compute the cost and efficiency variances for direct materials and direct labor. Does the pattern of variances suggest Best Fender's managers have been making trade-offs? Explain.

Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.)

Formula

Variance

Direct materials cost variance

=

=

Direct labor cost variance

=

=

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