Discount Suit Manufacturers produce diving suits for use in deep-sea diving. Its Standard Cost Card developed in December 2021 was as follows:

Uniform

Quantity Unit cost

Direct materials for each suit 5 yds. $5.50

Time required to cut and sew each suit 0.70 hr. 20.00

Electricity and supplies used per hour of labor 3.25

Planned production for 2023 12,500 suits

Planned length of materials needed in 2023 62,500 yds.

Planned hours to cut and sew 8,750 hrs.

Direct Materials Variance

Actual quantity used Actual quantity used Standard quantity planned.

x actual price/unit x standard price/unit x standard price

(qty)

Materials price variance Materials usage variance

Net Materials variance

Direct Labor Variance

Actual Hours used Actual Hours used Standard Hours planned.

x actual rate/hr. x standard rate/hr. x standard rate/hr.

(qty)

Labor rate variance Labor efficiency variance

Net Labor variance

Variable Mfg Overhead: Spending Variance

Standard Hours Allowed for Actual Output, at Standard Rate (SH SR)	Actual Hours of Input, at Standard Rate (AH SR)	Actual Hours of Input, at Actual Rate (AH AR)
	Variable overhead efficiency variance	Variable overhead rate variance
	Spending variance

Using the Formula approach:

Direct Material Variance = Direct materials price variance + Direct materials quantity variance

Direct Labor Variance = Direct labor rate variance + Direct labor efficiency variance

Variable overhead Variance = Variable overhead rate variance + Variable overhead efficiency variance

During the year 2022, the company provided the following production related information:

Purchased 63,000 yards of materials at $5.45 per yard.

Produced 12,800 suits.

Used 8,575 direct labor hours.

Rate of pay was $21.50 per hour.

Actual electricity and supplies used $3.41 per actual hours.

The company had no beginning or ending inventory in materials or finished suits.

In April 2022, there was a trade agreement that increased the hourly wages by a dollar, effective 7/01/2022. This increase was not factored in the standard cost card and so the card was not updated.

Required:

Prepare the make-up of the following variances:

a) Direct Materials Variance.

b) Direct Labor Variance,

c) Prepare the journal entry for the direct labor variances and

d) Variable Manufacturing Overhead Variance.

e) Comment on the overall cost variance for 2022.

.

A. Direct Materials Variances

Work Area
Materials Price:	Materials Usage:
$5.50	5 yds
$5.45 per yard	63,000 yards
$12,477 total	68,000 yards total

B. Direct Labor Variances

Work Area
Labor Rate:	Labor Efficiency:
$21.50 per hour	8,575 direct labor hrs

C.

General Journal
Date	Accounts	Dr.	Cr.

D. Variable Manufacturing Overhead Variances

Work Area
Variable Overhead Rate:	Variable Overhead Efficiency: