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REINERT OUTDOOR SUPPLY Reinert Outdoor Supply manufactures a portable, back-packable tent. Standards for direct materials and direct labor to manufacture the tent are shown below:
REINERT OUTDOOR SUPPLY | |||||||||
Reinert Outdoor Supply manufactures a portable, back-packable tent. Standards for direct materials | |||||||||
and direct labor to manufacture the tent are shown below: | |||||||||
Direct materials: | |||||||||
Fabric in finished tent (square yards) | 11 | ||||||||
Allowance for anticipted waste | 1 | ||||||||
Total standard fabric quantity per tent | 12 | ||||||||
Purchase price per square yard of fabric | $ 7.75 | ||||||||
Transportation cost per square yard | 0.25 | ||||||||
Standard price per square yard of fabric | $ 8.00 | ||||||||
Direct labor: | |||||||||
Hours required per tent | 2 | ||||||||
Standard rate per hour | $18 | ||||||||
The CEO of Reinert Outdoor Supply, Laramie, glanced at the cost report and saw that actual direct | |||||||||
materials used was $202,125 while being budgeted at only $192,000. | |||||||||
He also reviewed direct labor, and saw that actual labor cost was $70,350 while budgeted | |||||||||
labor cost was $72,000, good news! Laramie wanted to know why the differences existed in these | |||||||||
costs and asked you to prepare an analysis of these costs. | |||||||||
You investigated numbers, and found the following: In October, Reinert Outdoor Supply produced | |||||||||
2,000 portable tents and incurred the following actual direct materials and direct labor costs: | |||||||||
Purchased 25,000 sq yds of tent fabric at $8.25 per sq yd | |||||||||
Used 24,500 sq yds of tent fabric | |||||||||
Used 4,200 hours of direct labor at $16.75 per hour | |||||||||
Required: | |||||||||
1) Compute the direct materials price variances for both amounts purchased and used. | |||||||||
2) Compute the direct materials quantity variances for the amounts used. | |||||||||
3) Compute the direct labor rate variance. | |||||||||
4) Compute the direct labor efficiency variance. |
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