Explanations As Well! Parker Plastic, Inc., manufactures plastic mats to use wit

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Explanations As Well!

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last vear follows: Standard Quantity Standard Price (Rate) Standard Unit Cost $ 9.96 Direct materials (plastic) Direct labor Variable manufacturing overhead 12 sq ft. $ 0.83 per sq. ft. 0.25 hr10.50 per hr 0.25 h 2.20 per hr 2.62 0.55 (based on direct labor hours) Fixed manufacturing overhead ($345,800 ÷ 910,000 units) 0.38 Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,040,000 11,400,000 $ 9,120,000 308,000 $ 3,449,600 $ 689,000 $365,000 Required: Calculate Parker Plastic's direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Material Price Variance Direct Material Quantity Variance

Explanation / Answer

Variable overhead Rate Variance = (Standard Rate-Actual Rate)*Actual Hours Actual Direct Labour hours =      15,800.00 = (.8-.6)*15800 Actual Variable Overhead =         9,470.00 = 3,160 Favorable Actual Overhead Rate = 0.60 Variable overhead Efficiency Variance = (Standar Hours-Actual Hours)*Standard Rate = (19840-15800)*.8 = 3,232.00 Favorable Variable overhead Spending variance =      6,392.00 Favorable

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