Dager, Inc. is a privately held furniture manufacturer. For August 2014, Dager had the following standards for one of its products, a wicker chair. Standards per Chair Direct materials 2 square yards of input at $ 5.00 per square yard Direct manufacturing labor 0.5 hour of input at $ 10.10 per hour The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,500; square yards of input purchased and used, 4,700; price per square yard, $5.20; direct manufacturing labor costs, 59,690; actual hours of input, 950; labor price per hour, $10.20. Read the requirements .... Requirement 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. Let's begin by determining the formula used to calculate the actual costs of direct materials, then enter the amounts in the formula and calculate the cost. Requirements Actual cost Direct materials Next we will calculate the actual input at the budgeted price Actual input Budgeted price Cost 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. 2. Suppose 7,200 square yards of materials were purchased at $5.20 per square yard), even though only 4,700 square yards were used. Suppose further that variances are identified at their most timely control point; accordingly, direct materials price variances are isolated and traced at the time of purchase to purchasing department rather than to the production department. Compute the price and efficiency variances under this approach. Direct materials Direct manufacturing labor Determine the formula and calculate the costs for the flexible budget. X = Flexible budget cost X Direct materials Direct manufacturing labor Print Done Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable (F) or unfavorable (U). Price Efficiency variances variances Direct materials Direct manufacturing labor Now give a plausible explanation of why each variance occurred. Begin with the direct material variances. The materials price variance: There was an unexpected in materials price per square yard due to competition The materials efficiency variance The production manager may have employed workers or the budgeted materials standards were set too The materials price variance: There was an unexpected in materials price per square yard due to competition The materials efficiency variance: The production manager may have employed workers or the budgeted materials standards were set too The labor price variance: in labor rates due to a The labor efficiency variance: efficient workers being employed or the use of quality materials

Treanor Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,300 tires at a variable cost of $73 per tire and total fixed costs of $56,500. The budgeted selling price was 5107 per tire. Actual results in August 2017 were 3,200 tires manufactured and sold at a selling price of $109 per tire. The actual total variable costs were $256,000, and the actual total fixed costs were $53,500. Read the requirements. Requirement 1. Prepare a performance report that uses a flexible budget and a static budget. Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label.) Actual Flexible-Budget Flexible Sales-Volume Static Results Variances Budget Variances Budget - X Units sold Requirements Revenues Variable costs Contribution margin 1. Prepare a performance report that uses a flexible budget and a static budget. 2. Comment on the results in requirement 1 Fixed costs Operating income Print Done Requirement 2. Comment on the results in requirement 1. The total static-budget variance in operating income is $ There is an) total flexible-budget variance and an sales-volume variance. The sales-volume variance arises solely because actual units manufactured and sold were than the budgeted 3,300 units. The flexible-budget variance in operating income is due primarily to the in unit variable costs