Please answer ALL requirements and show calculations.
E7-23 (final answer) Question Help Nancy Ann, Inc. designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of one dozen. Nancy Ann's May 2013 static budget and actual results for direct inputs are as follows: (Click the icon to view the data.) NancyAnn has a policy of analyzing all input variances when they add up to more than 10% of the total cost of materials and labor in the flexible budget, and this is true in May 2013. The production manager discusses the sources of the variances: "A new type of material was purchased in May. This led to faster cutting and sewing, but the workers used more material than usual as they learned to work with it. For now, the standards are fine." Read the requirements Requirement 1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2013. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget? Begin by calculating the price variances then, calculate the efficiency variances. (Round your interim and final answers to the nearest cent. Label each variance as favorable (F) or unfavorable (U.) Price Variance May 2013 Direct materials Direct labor D A Choose from any list or enter any number in the input fields and then click Check Answer. Data Table 550 11 meters at $1.40 per meter = $15.40 1.5 hours at $7.70 per hour = $11.55 Static Budget Number of T-shirt lots (1 lot = 1 dozen) Per Lot of T-shirts: Direct materials Direct manufacturing labor Actual Results Number of T-shirt lots sold Total Direct Inputs: Direct materials Direct manufacturing labor 600 7,320 meters at $1.65 per meter = $12,078.00 840 hours at $7.80 per hour = $6,552.00 Print Done 0 X - Requirements 1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2013. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget? 2. Nancy Walker, the CEO, is concerned about the input variances. But she likes the quality and feel of the new material and agrees to use it for one more year. In May 2014, Nancy Ann again produces 600 lots of T-shirts. Relative to May 2013, 2% less direct material is used, direct material price is down 5%, and 2% less direct manufacturina labor is used. Labor price has remained the same as in May 2013. Calculate the direct materials t manufacturing labor price and efficiency variances in May 2014. What is the total flexible budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget? 3. Comment on the May 2014 results. Would you continue the "experiment" of using the new material? Print Print Done E7-23 (final answer) Question Help Nancy Ann, Inc. designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of one dozen. Nancy Ann's May 2013 static budget and actual results for direct inputs are as follows: (Click the icon to view the data.) NancyAnn has a policy of analyzing all input variances when they add up to more than 10% of the total cost of materials and labor in the flexible budget, and this is true in May 2013. The production manager discusses the sources of the variances: "A new type of material was purchased in May. This led to faster cutting and sewing, but the workers used more material than usual as they learned to work with it. For now, the standards are fine." Read the requirements Requirement 1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2013. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget? Begin by calculating the price variances then, calculate the efficiency variances. (Round your interim and final answers to the nearest cent. Label each variance as favorable (F) or unfavorable (U.) Price Variance May 2013 Direct materials Direct labor D A Choose from any list or enter any number in the input fields and then click Check Answer. Data Table 550 11 meters at $1.40 per meter = $15.40 1.5 hours at $7.70 per hour = $11.55 Static Budget Number of T-shirt lots (1 lot = 1 dozen) Per Lot of T-shirts: Direct materials Direct manufacturing labor Actual Results Number of T-shirt lots sold Total Direct Inputs: Direct materials Direct manufacturing labor 600 7,320 meters at $1.65 per meter = $12,078.00 840 hours at $7.80 per hour = $6,552.00 Print Done 0 X - Requirements 1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2013. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget? 2. Nancy Walker, the CEO, is concerned about the input variances. But she likes the quality and feel of the new material and agrees to use it for one more year. In May 2014, Nancy Ann again produces 600 lots of T-shirts. Relative to May 2013, 2% less direct material is used, direct material price is down 5%, and 2% less direct manufacturina labor is used. Labor price has remained the same as in May 2013. Calculate the direct materials t manufacturing labor price and efficiency variances in May 2014. What is the total flexible budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget? 3. Comment on the May 2014 results. Would you continue the "experiment" of using the new material? Print Print Done
