Question
Stratton, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as
Stratton, 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 | $3 per yard | 2.00 | yards | $6.00 | ||||
Direct labor | $14 per DLH | 0.75 | DLH | 10.50 | ||||
Variable overhead | $3.20 per DLH | 0.75 | DLH | 2.40 | ||||
Fixed overhead | $3 per DLH | 0.75 | DLH | 2.25 | ||||
$21.15 |
Sandy Robison, 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, Sandy asked CFO Suzy Summers for more information. She provided the following overhead budgets, along with the actual results for November. The company purchased 82,000 yards of fabric and used 93,700 yards of fabric during the month. Fabric purchases during the month were made at $2.80 per yard. The direct labor payroll ran $457,375, with an actual hourly rate of $12.50 per direct labor hour. The annual budgets were based on the production of 600,000 shirts, using 450,000 direct labor hours. Though the budget for November was based on 45,000 shirts, the company actually produced 42,500 shirts during the month.
Variable Overhead Budget | |||||||
---|---|---|---|---|---|---|---|
Annual Budget | Per Shirt | NovemberActual | |||||
Indirect material | $720,000 | $1.20 | $52,900 | ||||
Indirect labor | 450,000 | 0.75 | 31,400 | ||||
Equipment repair | 180,000 | 0.30 | 13,700 | ||||
Equipment power | 90,000 | 0.15 | 6,500 | ||||
Total | $1,440,000 | $2.40 | $104,500 |
Fixed Overhead Budget | |||||
---|---|---|---|---|---|
Annual Budget | NovemberActual | ||||
Supervisory salaries | $430,000 | $37,200 | |||
Insurance | 140,000 | 11,500 | |||
Property taxes | 60,000 | 5,000 | |||
Depreciation | 245,000 | 21,300 | |||
Utilities | 225,000 | 18,000 | |||
Quality inspection | 250,000 | 22,400 | |||
Total | $1,350,000 | $115,400 |
(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 | $16400 | select an option FavorableUnfavorableNot Applicable |
---|---|---|
Direct material quantity variance | $9000 | select an option UnfavorableFavorableNot Applicable |
Need help getting the Direct material quantity variance? my answer was incorrect please and thank you
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started