Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Boat Guard, which used a standard cost accounting system, manufactured 210,000 boat fenders during the year, using 1,780,000 feet of extruded vinyl purchased at $1.30

image text in transcribed

Boat Guard, which used a standard cost accounting system, manufactured 210,000 boat fenders during the year, using 1,780,000 feet of extruded vinyl purchased at $1.30 per foot. Production required 4,900 direct labor hours that cost $13.00 per hour. The materials standard was 8 feet of vinyl per fender at a standard cost of $1.40 per foot. The labor standard was 0.024 direct labor hour per fender at a standard cost of $12.00 per hour. Read the requirements. Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). 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 compute the price variance for direct materials. (Assume that the quantity of materials purchased equal to the quantity of materials usod.) = DM price variance Determine the formula for the direct materials quantity variance, then compute the quantity variance for direct materials = DM quantity variance Next, compute the variances for direct labor. First, determine the formula for the rate variance, then compute the rate variance for direct labor. x DL rale variance x Determine the formula for direct labor the efficiency variance, then compute the efficiency variance for direct labor. ) = DL efficiency variance Requirement 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. The direct materials price variance combined with the direct materials quantity variance suggests that managers may have used y materials. The net effect is The direct labor rate variance combined with the direct labor efficiency variance suggests that managers may have used workers who performed more efficiently. The net effect is

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Consolations Of Economics How We Will All Benefit From The New World Order

Authors: Gerard Lyons

1st Edition

0571307795, 9780571307791

More Books

Students also viewed these Accounting questions

Question

Define and explain the goals of employee orientation/onboarding

Answered: 1 week ago