Question
Rugged Life, Inc., designs and manufactures fleece quarter-zip jackets. It sells its jackets to brand-name outdoor outfitters in lots of one dozen. Rugged Lifes May
Rugged Life, Inc., designs and manufactures fleece quarter-zip jackets. It sells its jackets to brand-name outdoor outfitters in lots of one dozen. Rugged Lifes May 2017 static budget and actual results for direct inputs are as follows: Rugged Life has a policy of analyzing all input variances when they add up to more than 8% of the total cost of materials and labor in the flexible budget, and this is true in May 2017. The production manager discusses the sources of the variances: A new type of material was purchased in May. This led to faster cutting and sewing, but the workers used more material than usual as they learned to work with it. For now, the standards are fine.
StaticBudget:Number of jacket lots (1 lot= 1 dozen)=300. Per Lot of Jackets:Direct materials 18 yards at $ 4.65 per yard= $83.70. Direct manufacturing labor2.4 hours at $ 12.50 per hour=$ 30.00. Actual Results Number of jacket lots sold 325 Total Direct Inputs:Direct materials 6.500 yards at $ 4.85 per yard= $ 31,525 Direct manufacturing labor 715 hours at $ 12.60=$ 9,009
Required:
1. Calculate the direct material spending variance
2. Calculate the direct material price variance
3.Calculate the direct material usage variance
4.Calculate the direct labor spending variance
5.Calculate the direct labor rate variance
6.Calculate the direct labor efficiency variance
7.Calculate the spending variance for the entire project/production run.
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