Question
Rudd Clothiers is a small company that manufactures tall-mens suits. The company has used a standard cost accounting system. In May 2017, 10,500 suits were
Rudd Clothiers is a small company that manufactures tall-mens suits. The company has used a standard cost accounting system. In May 2017, 10,500 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 15,500 direct labor hours. All materials purchased were used.
Cost Element | Standard (per unit) | Actual | ||
Direct materials | 7 yards at $4.20 per yard | $300,915 for 74,300 yards ($4.05 per yard) | ||
Direct labor | 1.10 hours at $13.00 per hour | $164,255 for 12,350 hours ($13.30 per hour) | ||
Overhead | 1.10 hours at $6.50 per hour (fixed $3.60; variable $2.90) | $48,500 fixed overhead $37,500 variable overhead |
Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $55,800, and budgeted variable overhead was $44,950. (a) Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to 0 decimal places, e.g. 125.)
(1) | Total materials variance | $ | Neither favorable nor unfavorableUnfavorableFavorable | |||
Materials price variance | $ | UnfavorableFavorableNeither favorable nor unfavorable | ||||
Materials quantity variance | $ | FavorableNeither favorable nor unfavorableUnfavorable | ||||
(2) | Total labor variance | $ | UnfavorableFavorableNeither favorable nor unfavorable | |||
Labor price variance | $ | FavorableNeither favorable nor unfavorableUnfavorable | ||||
Labor quantity variance | $ | Neither favorable nor unfavorableFavorableUnfavorable |
(b) Compute the total overhead variance.
Total overhead variance | $ | UnfavorableFavorableNeither favorable nor unfavorable |
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