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K Draper, Inc. is a privately held furniture manufacturer. For August 2 0 2 0 , Draper had the following standards for one of its
Draper, Inc. is a privately held furniture manufacturer. For August Draper had the following standards for one of its products, a wicker chair:
Click the icon to view the standards per chair.
direct manufacturing labor costs, $; actual hours of input, ; labor price per hour, $
Read the requirements. Let's begin by determining the formula used to calculate the actual costs of direct materials, then enter the amounts in the formula and calculate the cost.
Next we will calculate the actual input at the budgeted price.
Determine the formula and calculate the costs for the flexible budget.
Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable F or unfavorable U
Now give a plausible explanation of why each variance occurred. Begin with the direct material variances.
The materials price variance: There was an unexpected in materials price per square yard due to competition
The materials efficiency variance: The production manager may have employed
The labor price variance: in labor rates due to a
The labor efficiency variance: efficient workers being employed or the use of quality materials. production department. Compute the price and efficiency variances under this approach.
Begin with recalculating the costs using the information provided for the alternative approach.
Actual input
Now compute the direct materials price and efficiency variances. Label each variance as favorable F or unfavorable U
tablePrice,Efficiencyvariancevariance,Direct materials,,
Data table
Standards per Chair
Direct materials
square yards of input at $ per square yard
Direct manufacturing labor hour of input at $ per hour
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