Homework 2 Texas Boat Covers, Inc. which uses a standard cost accounting system, manufactured 2,000 boat covers during 2014, using 14,400 square feet of vinyl purchased at $1.05 per square foot. Production required 42 direct labor hours that cost $13.50 per hour. The direct labor standard was 0.025 direct labor hour per cover, at a standard cost of $12.50. The direct materials standard was 7 square feet of vinyl per cover, at a standard cost of $1.10 per square foot. You have what you need: standards and actual are given in the paragraph Requirement 1 - Compute the cost and efficiency variances for direct materials and direct labor Begin the cost variances for each. Select the "shortcut" formula and compute. (Note: you can use the "shortcut" formula or the regular formula to compute the variance) Direct materials cost variance = (AC-SC) X AQ = (1.05-1.10) x 14,400 sq. ft=720 F Direct labor cost variance = (AC-SC X AQ = 4. U Next, compute the efficiency variance for each. Select the "shortcut" formula and compute. (Note: you can use the "shortcut" formula or the regular formula to compute the variance) Direct materials efficiency variance = (AQ-SQ) X SC - 5. U Direct labor efficiency variance = (AQ-SQ) x SC = 100 F Requirement 2 - Now, take a few minutes and consider what this information tells managers about operations