Problem 23-2B Flexible Budgeting and Variance Analysis

Yukon Coat Company makes women's and men's coats. Both products require filler and lining material. The following planning information has been made available:

The expected beginning inventory and desired ending inventory were realized.

Required:

1. Prepare the following variance analyses for each coat and total, based on the actual results and production levels at the end of the budget year:

1. Direct materials price variance, direct materials quantity variance, and total variance.
2. Direct labor rate variance, direct labor time variance, and total variance.

Use the minus sign to enter favorable variances as negative numbers.

a.	Direct materials price variance:	$	Select Favorable UnfavorableItem 2
	Direct materials quantity variance:	$	Select Favorable UnfavorableItem 4
	Total direct materials cost variance:	$	Select Favorable UnfavorableItem 6
b.	Direct labor rate variance:	$	Select Favorable UnfavorableItem 8
	Direct labor time variance:	$	Select Favorable UnfavorableItem 10
	Total direct labor cost variance:	$	Select Favorable UnfavorableItem 12

2. Why are the standard amounts in part (1) based on the actual production at the end of the year instead of the planned production at the beginning of the year?

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