Question
Variance Computations and Explanations Outdoor Company manufactures camping tents from a lightweight synthetic fabric. Each tent has a standard materials cost of $20, consisting of
Variance Computations and Explanations
Outdoor Company manufactures camping tents from a lightweight synthetic fabric. Each tent has a standard materials cost of $20, consisting of 4 yards of fabric at $5 per yard. The standards call for 2 hours of assembly at $12 per hour. The following data were recorded for October, the first month of operations:
Fabric purchased 9,000 yards x $4.90 per yard
Fabric used in production of 1,700 tents 7,000 yards
Direct Labor used 3,6000 hours x $12.50 per hour
Required
a) Compute all standards cost variances for materials and labor
b) give one possible reason for each of the preceding variances
c) determine the standard variable cost of the 1,700 tents produced, seprated into direct materials and labors.
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