Question
Deporte Company produces single colored T-shirts. Materials for the shirts are dyed. in large vats. After dying the materials for a given color, the vats
Deporte Company produces single colored T-shirts. Materials for the shirts are dyed. in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:
Direct Materials (2.4lbs @ $0.95) $2.28
Direct Labor (0.75 hr. @ $7.40) 5.55
Standard Prime Cost $7.83
During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:
Direct Materials $68,040
Direct Labor $194,428 (for 22,450 hrs. )
Required:
Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.
Material Variances
Price Variance $_______
Usage Variance $________
Labor Variances
Rate Variance $________
Efficiency Variance $________
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