Question
Deluxe Guard, which used a standard cost accounting system, manufactured 190.000 boat fenders during the year, using 1.240,000 feet of extruded vinyl purchased at
Deluxe Guard, which used a standard cost accounting system, manufactured 190.000 boat fenders during the year, using 1.240,000 feet of extruded vinyl purchased at $1.25 per foot Production required 4,700 direct labor hours that cost $14.00 per hour. The materials standard was 6 feet of vinyl per fender at a standard cost of $1.35 per foot. The labor standard was 0.025 direct labor hour per fender at a standard cost of $12.50 per hour Read the Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor (Assume that the quantity of materials purchased is equal to the quantity of materns used Enter the verance as a positive number Round your answers to the nearest whole dotar Label the variances as favorable (F) or unfavorable (US) The direct materials price variance The direct materiais quantity vanance is 124000 F (125000) U The drect labor rate variance is The direct labor efficiency vanance Requirement 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain The favorable dred materials price variance combined with the favorable The unfavorable direct labor rate variance combined with the favorable direct materials quantity variance suggests that managers may have used higher-quality materials. The net effect is favorable direct labor efficiency variance suggests that managers may have used lower-paid workers who performed more efficiently The net effect is favorate
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