Waterway, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems....
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Waterway, 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 Direct materials $3 per yard Standard Quantity 2.00 yards Standard Cost $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 82.900 yards of fabric and used 94,500 yards of fabric during the month. Fabric purchases during the month were made at $2.80 per yard. The direct labor payroll ran $470,400, with an actual hourly rate of $12.25 per direct labor hour. The annual budgets were based on the production of 609,000 shirts, using 459,000 direct labor hours. Though the budget for November was based on 46,400 shirts, the company actually produced 42,900 shirts during the month. Waterway, 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 Direct materials $3 per yard Standard Quantity 2.00 yards Standard Cost $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 82.900 yards of fabric and used 94,500 yards of fabric during the month. Fabric purchases during the month were made at $2.80 per yard. The direct labor payroll ran $470,400, with an actual hourly rate of $12.25 per direct labor hour. The annual budgets were based on the production of 609,000 shirts, using 459,000 direct labor hours. Though the budget for November was based on 46,400 shirts, the company actually produced 42,900 shirts during the month.
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