Question
Genola Fashions began production of a new product on June 1. The company uses a standard cost system and has established the following standards for
Genola Fashions began production of a new product on June 1. The company uses a standard cost system and has established the following standards for one unit of the new product: |
Standard Quantity or Hours | Standard Price or Rate | Standard Cost | |||
Direct materials | 5.3 | yards | $7.10 | per yard | $37.63 |
Direct labor | 0.3 | hours | $10.80 | per hour | $3.24 |
During June, the following activity was recorded for the new product: |
a. | Purchasing acquired 8,800 yards of material at a cost of $6.82 per yard. |
b. | Production used 7,800 yards of the material to manufacture 1,400 units of the new product. |
c. | Production reported that 965 direct labor-hours were worked on the new product at a cost of $11,773. |
Required: |
1. | For direct materials: |
a. | Compute the materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
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