Question
MariaLou, Inc. designs and manufactures fleecequarter-zip jackets. It sells its jackets tobrand-name outdoor outfitters in lots of one dozen. MariaLou's May 2017 static budget and
MariaLou, Inc. designs and manufactures fleecequarter-zip jackets. It sells its jackets tobrand-name outdoor outfitters in lots of one dozen. MariaLou's May 2017 static budget and actual results for direct inputs are asfollows:
Static Budget
Number of jacket lots (1 lot = 1 dozen)
650
Per Lot of Jackets:
Direct materials
14 yards at $1.30 per yard = $18.20
Direct manufacturing labor
1.7 hours at $7.80 per hour = $13.26
Actual Results
Number of jacket lots sold
675
Total Direct Inputs:
Direct materials
10,800 yards at $1.50 per yard = $16,200.00
Direct manufacturing labor
1,013 hours at $7.90 per hour = $8,002.70
Additional Info: Maria Lou has a policy of analyzing all input variances when they add up to more than8% of the total cost of materials and labor in the flexiblebudget, and this is true in May 2017. The production manager discusses the sources of thevariances: "A new type of material was purchased in May. This led to faster cutting andsewing, but the workers used more material than usual as they learned to work with it. Fornow, the standards arefine
Requirement 1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2017. What is the totalflexible-budget variance for both inputs(direct materials and direct manufacturinglabor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexiblebudget?
Begin by calculating the direct materials and direct manufacturing labor price and efficiency variances in May 2017. Complete the actualresults, pricevariance, and costcolumns, then the efficiency variance and flexible budget columns. Label each variance as favorable or unfavorable. (Round all answers to the nearestcent.)
Requirement 2. Comment on the May 2017 results. Would you continue the"experiment" of using the newmaterial?
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