Cost variance analysis

Camping Company manufactures camping tents from a lightweight synthetic fabric.

Each tent uses the following standard material and labor costs.

Standard cost per tent

Direct Labor 2hours at $10.50 $21

Direct Material 4yards at $5.25 $21

The following data was recorded for February, the first month of operations:

Fabric purchased 9000yards $5.10per yard

Fabric used in production 6,700yards

Direct labor used 3300hours $10.75 per hour

Actual number of Tents produced 1,640 Tents

Make sure you do not forget to label the variances U or F.You need to show your work either by showing your calculation to the side.

1.Calculate thedirect materials price and quantity variance and designate U or F. Please note that the materials price variance is based on actual material purchased and the quantity variance is based on material used.

• Materials price variance
• Materials Quantity variance

2.Calculate the direct labor rate and efficiency variances and designate U or F.

• Labor rate variance
• Labor Efficiency variance

3.Explain one possible reason for each of the preceding variances listed below.

• Materials price variance

• Materials Quantity variance

• Labor rate variance

• Labor Efficiency variance

Cost variance analysis Camping Company manufactures camping tents from a lightweight synthetic fabric. Each tent uses the following standard material and labor costs. Standard cost per tent Direct Labor 2 hours at $10.50 $21 Direct Material 4 yards at $5.25 $21 The following data was recorded for February, the first month of operations Fabric purchased 9000 yards $5.10 per yard Fabric used in production 6,700 yards Direct labor used 3300 hours $10.75 per hour Actual number of Tents produced 1,640 Tents Required: Make sure you do not forget to label the variances U or F. You need to show your work either by showing your calculation to the side. 1. Calculate the direct materials price and quantity variance and designate U or F. Please note that the materials price variance is based on actual material purchased and the quantity variance is based on material used. Materials price variance Materials Quantity variance 2. Calculate the direct labor rate and efficiency variances and designate U or F. Labor rate variance Labor Efficiency variance 3. Explain one possible reason for each of the preceding variances listed below. Materials price variance Materials Quantity variance Labor rate variance Labor Efficiency variance