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Great Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2024, using 141,000 square feet of extruded vinyl purchased at $1.20
Great Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2024, using 141,000 square feet of extruded vinyl purchased at $1.20 per square foot. Production required 430 direct labor hours that cost $13.00 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.25 per square foot. The labor standard was 0.027 direct labor hour per fender, at a standard cost of $12.00 per hour. Read the requirement. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Direct materials cost variance (AC -SC) AQ Direct labor cost variance =(AQ SQ) SC (AC - SC) AQ (AC -SC) SQ (AQ - SQ) AC (AQ - SQ) SC Actual FOH - Allocated FOH Actual FOH - Budgeted FOH Bugeted FOH - Allocated FOH Variance F U Requirement Compute the cost and efficiency variances for direct materials and direct labor. Does the pattern of variances suggest Great Fender's managers have been making trade-offs? Explain. Print Done
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