Fabric Plant:

Budgeted overhead: $1,200,000 (50% fixed)

Practical volume (direct labor hours): 120,000 hours

Actual overhead: $1,150,000 (50% fixed)

Actual hours worked:

Weaving and Pattern Coloring and Bolting Total

Fabric FB60 20,000 12,000 32,000

Fabric FB70 28,000 14,000 42,000

Fabric FB80 26,000 18,000 44,000

Total 74,000 44,000 118,000

Departmental data on Fabric FB70 (actual costs and actual outcomes):

Weaving and Pattern Coloring and Bolting

Beginning inventories:

Units* 20,000 400

Costs:

Transferred in $0 $100,000

Materials $80,000 $8,000

Labor $18,000 $6,600

Overhead $22,000 $9,000

Current production:

Units started 80,000 ?

Units transferred out 80,000 3,200

Costs:

Transferred in $0 ?

Materials $320,000 $82,000

Labor $208,000 $99,400

Overhead ? ?

Percentage completion:

Beginning inventory 30% 40%

Ending inventory 40% 50%

*Units are measured in yards for the Weaving and Pattern Department and in bolts for the Coloring and Bolting Department._Note: With the exception of the cardboard bolt rods, materials are added at the beginning of each process. The cost of the rods is relatively insignificant and is included in overhead.

Proposed standard cost sheet for Fabric FB70 (for the Coloring and Bolting Department only):

Transferred in materials (25 yards @ $10) $250.00

Other materials (100 ounces @ $0.20) 20.00

Labor (3.1 hours @ $8) 24.80

Fixed overhead (3.1 hours @ $5) 15.50

Variable overhead (3.1 hours @ $5) 15.50

Standard cost per unit $325.80

6. In the Bolting and Coloring Department, 400,000 ounces of other materials were used to produce the output of the period. Using the proposed standard cost sheet, calculate the following variances for the Coloring and Bolting Department:

a. Materials price variance (for other materials only)

b. Materials usage variance (for other materials only)

c. Labor rate variance

d. Labor efficiency variance

In calculating the variances, which method did you use to compute the actual output of the periodFIFO or weighted average? Explain.