C&C Sports experienced direct materials and direct labor variances as a result of purchasing lower-quality jacket lining from a new vendor. Review the following to refresh your understanding of these variances. EXHIBIT 6.10 CRC Sports' direct materials variances for lining Actual Results AQnch X AP AQP X SP 25.000 yanha X 81parar 25,000 yanix $2 peran 543.350 $30,010 $43,750 - $50.000 Direct Materials Price Variance 56,250 F AQusa X SP 34,000 yards x 52 per yard SUM Flexible Budget SQ x SP (10,000 jackets x 2 wurda perjoit) $2 peyard 2xl yard Speyard 540.000 348,000 - $40,000 Direct Materials Quantity Variance 58,000 U EXHIBIT 6.13 C&C Sports' direct labur variances for jackets. Actual Results Flexible Budget ADX AP AQ X SP SQ X SP 16,500 hours x $16.00 per hour (10.000 jackets x 1.5 bours per jacket) x $16.00 per hour $275,500 $264,000 15.000 DLH X $16.00 $240,000 $275.500 - $264,000 S264,000 - $240,000 Direct Labxr Rate Variance $11,500U Direct Labor Efficiency Variance $24,000 U $275,500 - $240,000 Direct Labor Flexible Budget Variance 535,500U Consider each scenario independently. Assume that after experiencing the variances associated with the lower-quality lining. C&C Sports decides to purchase lining from its previous vendor. Based on past experience, C&C's inventory manager, Bradley Austin, does not anticipate any problems with the previous vendor providing an adequate supply of lining at the appropriate quality level. Provided that C&C's standards are current, what effect would you anticipate this move to have on the direct materials price variance? On the direct materials quantity variance? On the direct labor rate variance? On the direct labor efficiency variance? B 1 VTT I = = = = = LI O Words) e Textbook and Media Assume that after investigating the recent variances arising from the lower-quality lining purchase. C&C Sports decides to continue purchasing this lining and to focus on training its workers to improve their ability to cut and sew the lining. Those workers who had never worked on jackets and were pulled into service to meet the production schedule are also included in this training effort What effect would you anticipate this move to have on the direct materials price variance? On the direct materials quantity variance? On the direct labor rate variance? On the direct labor efficiency variance? B 1 VT; TIE LI O Words) e Textbook and Media After completing the December production rush. C&C Sports sales budget does not require any awardjacket production in the first quarter. When production resumes at a low level in April, what effect would you anticipate the lack of recent production experience to have on the direct materials price variance? On the direct materials quantity variance? On the direct labor rate variance? On the direct labor efficiency variance? B 1 U T TIE Jol Il IMI 99 NI E & 1 TH 1 t O Words)
