Problem 6-32

Gerald/Brooke, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows.

		Standard Price		Standard Quantity		Standard Cost
Direct materials		$1.6 per yard		1.25 yards		$2
Direct labor		$12 per DLH		0.25 DLH		3
Variable overhead		$4 per DLH		0.25 DLH		1
Fixed overhead		$6 per DLH		0.25 DLH		1.5
						$7.50

Bobby Brickley, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Bobby asked CFO Lila Davis for more information. She provided the following overhead budgets, along with the actual results for November. The company purchased and used 116,400 yards of fabric during the month. Fabric purchases during the month were made at $1.45 per yard. The direct labor payroll ran $251,559, with an actual hourly rate of $12.1 per direct labor hour. The annual budgets were based on the production of 1,004,950 shirts, using 256,500 direct labor hours. Though the budget for November was based on 89,700 shirts, the company actually produced 83,160 shirts during the month.

		Variable Overhead Budget
		Annual Budget		Per Shirt		NovemberActual
Indirect material		$452,400		$0.45		$38,000
Indirect labor		303,700		0.3		34,460
Equipment repair		202,400		0.2		20,000
Equipment power		52,200		0.05		13,900
Total		$1,010,700		$1.00		$106,360

		Fixed Overhead Budget
		Annual Budget		NovemberActual
Supervisory salaries		$264,500		$22,100
Insurance		351,300		31,600
Property taxes		81,300		7,300
Depreciation		320,000		38,000
Utilities		211,200		21,700
Quality inspection		282,000		32,800
Total		$1,510,300		$153,500

(a) Calculate the direct materials price and quantity variances for November. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Direct material price variance

$

Direct material quantity variance

$

(b) Calculate the direct labor rate and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Direct labor rate variance

$

Direct labor efficiency variance

$

(c) Calculate the variable overhead spending and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Variable overhead spending variance

$

Variable overhead efficiency variance

$

(d) Calculate the fixed overhead spending variance for November. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Fixed overhead spending variance

$