Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 $3per yard 2.00yards $6.00

Direct labor $14per DLH 0.75DLH 10.50

Variable overhead $3.20per DLH 0.75DLH 2.40

Fixed overhead $3per DLH 0.75DLH 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 purchased82,000yards of fabric and used93,700yards of fabric during the month. Fabric purchases during the month were made at $2.80per yard. The direct labor payroll ran $457,375, with an actual hourly rate of $12.50per direct labor hour. The annual budgets were based on the production of600,000shirts, using450,000direct labor hours. Though the budget for November was based on45,000shirts, the company actually produced42,500shirts 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$

Select an option Favorable Unfavorable Not Applicable

Direct material quantity variance$

Select an option Favorable Unfavorable Not Applicable

(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$

Select an option Unfavorable Favorable Not Applicable

Direct labor efficiency variance$

Select an option Not Applicable Unfavorable Favorable

(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$

Select an option Unfavorable Favorable Not Applicable

Variable overhead efficiency variance$

Select an option Favorable Unfavorable Not Applicable

(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$

enter the fixed overhead spending variance in dollars

select an option Unfavorable Favorable Not Applicable

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Detecting Accounting Fraud Analysis And Ethics

Authors: Cecil Jackson

1st Edition

0133078604, 9780133078602

More Books

Students also viewed these Accounting questions

Question

An improvement in the exchange of information in negotiations.

Answered: 1 week ago

Question

1. Effort is important.

Answered: 1 week ago