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REQUIREMENTS

DATA TABLE

QUESTIONS

OPTIONS FOR REQUIREMENT 4

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. Prepare a standard cost income statement through gross profit to report all variances to management. Sales price was $10.70 per roll. 4. Barry Garden Supplies intentionally purchased cheaper materials during May. Was the decision wise? Discuss the trade-off between the two materials variances. Data Table Standard Actual Unit Cost Total Cost $ $ 3.45 $ 149,930 0.70 Direct materials: Standard (3 kg x $1.15 per kg) Actual (136,300 kg x $1.10 per kg) Direct labour: Standard (0.1 hr x $7.00 per hr) Actual (4,630 hr x $6.70 per hr) Manufacturing overhead: Standard: Variable (0.2 machine hr x $9.00 per hr) Fixed ($92,000 for static budget volume of 40,300 units and 8,060 machine hours) 31,021 $ 1.80 2.28 4.08 Actual 168,900 $ 8.23 $ 349,851 Total manufacturing costs Barry Garden Supplies makes ground covers to prevent weed growth. During May, the company produced and sold 44,300 rolls and recorded the following cost data: (Click the icon to view the cost data.) Requirements Requirement 1. Compute the price and efficiency variances for direct materials and direct labour. Begin by determining the formula for the price variance, then compute the price variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) ) = Price variance DM DL ) Next, determine the formula for the efficiency variance, then compute the efficiency variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) ) x = Efficiency variance DM x DL X Requirement 2. For manufacturing overhead, compute the total variance, the flexible budget variance, and the production volume variance. (Enter the results as positive numbers. Label each variance favourable (F) or unfavourable (U).) Barry Garden Supplies Computation of Overhead Variances Total overhead variance: Actual overhead cost Standard overhead allocated to production Total overhead variance Overhead flexible budget variance: Actual overhead cost Flexible budget overhead for actual outputs Overhead flexible budget variance Production volume variance: Flexible budget overhead for actual outputs Standard overhead allocated to production Production volume variance Requirement 3. Prepare a standard cost income statement through gross profit to report all variances to management. Sales price was $10.70 per roll. (Use a minus sign or parentheses for favourable variances.) Barry Garden Supplies Standard Cost Income Statement Month Ended May 31 Sales revenue Cost of goods sold at standard cost Manufacturing cost variances: Direct materials price variance Direct materials officiency variance Direct labour price variance Direct labour efficiency variance Overhead flexible budget variance Production volume variances Total manufacturing cost variances Cost of goods sold at actual cost Gross profit Requirement 4. Barry Garden Supplies intentionally purchased cheaper materials during May. Was the decision wise? Discuss the trade-off between the two materials variances. It appears that Barry's decision to purchase cheaper materials was V. The price variance V offset the efficiency variance Requirement 4. Barry Garden Supplies intentionally purchased cheaper materials during May. Was the decision wise? Discuss the trade-off between the two materials variances. It appears that Barry's decision to purchase cheaper materials was V. The price variance offset the efficiency variance. Choose from any list or enter any number in the input fields and not wise the next question. wise Requirement 4. Barry Garden Supplies intentionally purchased cheaper materials during May. Was the decision wise? Discuss the trade-off between the two materials variances. It appears that Barry's decision to purchase cheaper materials was The V price variance offset the efficiency variance. Choose from any list or enter any number in the input fields and then continue favourable unfavourable Requirement 4. Barry Garden Supplies intentionally purchased cheaper materials during May. Was the decision wise? Discuss the trade-off between the two materials variances. It appears that Barry's decision to purchase cheaper materials was V. The V price variance offset the efficiency variance. Choose from any list or enter any number in the input fields and then continue to the next question. did not more than Requirement 4. Barry Garden Supplies intentionally purchased cheaper materials during May. Was the decision wise? Discuss the trade-off between the two materials variances. It appears that Barry's decision to purchase cheaper materials was The price variance offset the efficiency variance. Choose from any list or enter any number in the input fields and then continue to the next question. favourable unfavourable