Superior Guard, which used a standard cost accounting system, manufactured 200,000 boat fenders during the year, using 1,300,000 feet of extruded vinyl purchased at $1.45 per foot. Production required 4,600 direct labor hours that cost $17.00 per hour. The materials standard was 6 feet of vinyl per fender at a standard cost of $1.55 per foot. The labor standard was 0.026 direct labor hour per fender at a standard cost of $15.50 per hour. Read the requirements. Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials, DL = Direct labor.) Begin with the variances for direct materials. First, determine the formula for the direct materials price variance, then compute the price variance for direct materials. (Assume that the quantity of materials purchased is equal to the quantity of materials used.) 2) = DM price variance DEN x i Requirements Determine the formula for the direct materials quantity variance, then compute the quantity variance for direct materials JJ) = DM quantity variance 1. 2. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. Next, compute the variances for direct labor. First, determine the formula for the rate variance, then compute the rate variance for direct labor. D = DL rate variance x Determine the formula for direct labor the efficiency variance, then compute the efficiency variance for direct labor. D = DL efficiency variance Requirement 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. The direct materials price variance combined with the direct materials quantity variance suggests that managers may have used materials. The net effect is The direct labor rate variance combined with the direct labor efficiency variance suggests that managers may have used workers who performed more efficiently. The net effect is Quality Guard, which used a standard cost accounting system, manufactured 190,000 boat fenders during the year, using 1,620,000 feet of extruded vinyl purchased at $1.15 per foot. Production required 4, 100 direct labor hours that cost $14.50 per hour. The materials standard was 8 feet of vinyl per fender at a standard cost of $1.30 per foot. The labor standard was 0.028 direct labor hour per fender at a standard cost of $14.00 per hour. Read the requirements. Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials, DL = Direct labor.) Begin with the variances for direct materials. First, determine the formula for the direct materials price variance, then compute the price variance for direct materials. Assume that the quantity of materials purchased is equal to the quantity of materials used.) D = DM price variance ]] = DO i Requirements Determine the formula for the direct materials quantity variance, then compute the quantity variance for direct materials. J) = DM quantity variance Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. 2. Next, compute the variances for direct labor. First, determine the formula for the rate variance, then compute the rate variance for direct labor. = DL rate variance x Determine the formula for direct labor the efficiency variance, then compute the efficiency variance for direct labor. = DL efficiency variance Requirement 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. The direct materials price variance combined with the direct materials quantity variance suggests that managers may have used materials. The net effect is The direct labor rate variance combined with the direct labor efficiency variance suggests that managers may have used workers who performed more efficiently. The net effect is
