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P1O-68A Determine all variances (Learning Objectives 4 & 5) Avanti manufactures embroidered jackets. The company prepares flexible budgets and uses a standard cost system to
P1O-68A Determine all variances (Learning Objectives 4 & 5) Avanti manufactures embroidered jackets. The company prepares flexible budgets and uses a standard cost system to control manufacturing costs. The following standard unit cost of a jacket is based on the static budget volume of 14,000 jackets per month: $12.00 18.80 Direct materials (3.0 m2x $4.00 per m2). Direct labour (2 hours x $9.40 per hour) Manufacturing overhead $1.30 Variable (2 hours $0.65 per hour) Fixed (2 hours $2.20 per hour) 4.40 570 Total cost per jacket $36.50 Data for November of the current year include the following: a. Actual production was 13,600 jackets. b. Actual direct materials usage was 2.70 m2 per jacket at an actual cost of $4.15 per m2. c. Actual direct labour usage of 24,480 hours cost $235,008. d. Total actual overhead cost was $79,000. Requirements 1. Compute the price and efficiency variances for direct materials and direct labour. 2. For manufacturing overhead, compute the total variance, the flexible budget variance, and the production volume variance. 3. Avanti's management intentionally purchased superior materials for November produc- tion. How did this decision affect the other cost variances? Overall, was the decision wise? Explain
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