Flexible Budgeting and Variance Analysis

I'm Really Cold Coat Company makes women's and men's coats. Both products require filler and lining material. The following planning information has been made available:

Standard Amount per Unit
	Womens Coats		Mens Coats		Standard Price per Unit
Filler	4.0 lbs.		5.20 lbs.		$2.00 per lb.
Liner	7.00 yds.		9.40 yds.		8.00 per yd.
Standard labor time	0.40 hr.		0.50 hr.

	Womens Coats		Mens Coats
Planned production	5,000 units		6,200 units
Standard labor rate	$14.00 per hr.		$13.00 per hr.

I'm Really Cold Coat Company does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, I'm Really Cold Coat Company experienced the following actual results:

	Womens Coats		Mens Coats
Actual production	4,400		5,800
	Actual Price per Unit		Actual Quantity Purchased and Used
Filler	$1.90 per lb.		48,000
Liner	8.20 per yd.		85,100
	Actual Labor Rate		Actual Labor Hours Used
Women's coats	$14.10 per hr.		1,825
Men's coats	13.30 per hr.		2,800

The expected beginning inventory and desired ending inventory were realized.

Required:

1. Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year:

a. Direct materials price variance, direct materials quantity variance, and total variance.

b. Direct labor rate variance, direct labor time variance, and total variance.

Round your answers to two decimal places, if necessary. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a.	Direct materials price variance	$
	Direct materials quantity variance	$
	Total direct materials cost variance	$
b.	Direct labor rate variance	$
	Direct labor time variance	$
	Total direct labor cost variance	$

2. The variance analyses should be based on the amounts at volumes. The budget must flex with the volume changes. If the volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the production. In this way, spending from volume changes can be separated from efficiency and price variances.