Question
Gunlock Chair Co. is an elite manufacturer of mid-century modern solid oak chairs. At the start of May, the following budgeted unit amounts related to
Gunlock Chair Co. is an elite manufacturer of mid-century modern solid oak chairs. At the start of May, the following budgeted unit amounts related to its manufacture of these exclusive oak chairs:
- Direct materials: 8 square feet of oak per chair @ $35 per square foot
- Direct manufacturing labor: 3 hours per chair @ $40 per labor hour
Budgeted production for May was 1700 mid-century style chairs. There were no beginning inventories of direct materials or finished goods on May 1. Actual results for May are as follows:
- Direct materials purchased: 13,850 square feet for $493,060
- Direct materials used: 13,630 square feet
- Direct manufacturing labor: 5,425 hours at $42.00 per hour
Actual production in May is 1750 chairs.
Questions:
1. Compute the DM Purchase Price & Quantity variances for May
2. Compute the DL Rate and Efficiency variances for May
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Management and Cost Accounting
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
6th edition
1292063467, 978-1292063461
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