Hopkins Clothiers is a small company that manufactures tail-men\'s suits. The co

Question

Hopkins Clothiers is a small company that manufactures tail-men's suits. The company has used a standard cost accounting system. In May 2014, 11,200 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used. Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $49,000, and budgeted variable overhead was $36,400. Compute the total, price, and quantity variances for (1) materials and (2) labor.

Explanation / Answer

Particulars Standard Actual Qty Rate amount Qty Rate amount Materials      89,600.00           4.40        394,240.00      90,500.00            4.15        375,575.00 Labour      13,440.00    13.4000        180,096.00      14,200.00          14.10        200,220.00 Actual output      11,200.00 Materials reqd(11200*8)      89,600.00 Labour hrs reqd(11200*1.20)      13,440.00 DMCV = Std Cost - Actual Cost DMCV = 394,240 - 375,575 DMCV = 18665 F DMPV = (SP-AP)*AQ DMPV = (4.40-4.15)90500 DMPV = 22,625 F DMQV= (SQ-AQ)SP DMQV= (89600-90500)4.40 DMQV= 3,960 U DLCV = Std Cost - Actual Cost DLCV = 180,096 - 200,220 DLCV = 20124 U DLRV= (SR-AR)AH DLRV= (13.40-14.10)14200 DLRV= 9940 U DLEV = (SH-AH)SR DLEV = (13440 - 14200 ) 13.40 DLEV = 10,184 U Budgeted Fixed overhead      49,000.00 Standard Variable Overhead (13,440*2.60)      34,944.00 Total Standard Overheads      83,944.00 Actual Fixed Overhead      49,000.00 Actual Variable Overhead      37,000.00 Total Actual Overhead      86,000.00 O/H Variance = Std O/H - Actual O/H Overhead Variance = 83,944 - 86,000 Overhead Variance = 2,056 U

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