Deluxe Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 146,000 square feet of extruded vinyl purchased at $1.05 per square foot. Production required 440 direct labor hours that cost $14.00 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.10 per square foot. The labor standard was 0.027 direct labor hour per fender, at a standard cost of $13.00 per hour. Read the requirement. 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.) Direct materials cost variance Direct labor cost variance Formula Variance Select the required formulas, compute the efficiency 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.) Direct materials efficiency variance Direct labor efficiency variance Formula Variance Does the pattern of variances suggest Deluxe Fender's managers have been making trade-offs? Explain. The direct materials cost variance combined with the direct materials efficiency variance suggests that managers may have used direct materials. The net effect on the total direct materials variance is The direct labor cost variance combined with the direct labor efficiency variance suggests that managers may have used workers who performed more efficiently. The net effect on the total direct labor variance is Requirement Compute the cost and efficiency variances for direct materials and direct labor. Does the pattern of variances suggest Deluxe Fender's managers have been making trade-offs? Explain. Print Done