Zebra Company produces soft pillows made from goose down.The company uses a standard cost system and has
Question:
Zebra Company produces soft pillows made from goose down.The company uses a standard cost system and has set the following standards for materials and labour for each pillow:
Feathers from five large white geese (5 geese @ $5.50 per goose)
Fabric to make pillowcases (3 metres @ $2.25 per metre)
Direct labour (5 hours @ $15 per hour)
During the month, the company produced 1,000 goose-down pillows and used 5,400 geese and 3,200 meters of fabric.Actual goose down purchased was from 6,000 geese at $5 per goose.Actual fabric purchased was 3,000 metres at $2.50 per metre.There were no beginning inventories of goose down or fabric.The company worked 5,200 direct labour hours at a total cost of $83,200.
Required: Show Calculations including formulas
A.Determine the total materials price variance and whether it is favourable or unfavourable.
B.Determine the total materials usage variance and whether it is favourable or unfavourable.
C.Determine the labour rate variance and whether it is favourable or unfavourable.
D.Determine the labour efficiency variance and whether it is favourable or unfavourable.
E.Make all necessary journal entries to record the purchase of materials, the issuance and usage of materials, and the direct labour variances.
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman