11. Ex.10-35 eBook Materials and Labor Variances Deporte Company produces single

Question

11. Ex.10-35

eBook

Materials and Labor Variances

Deporte Company produces single­colored t­shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:

Direct materials (2.4 lbs. @ $0.95) Direct labor (0.75 hr. @ $7.40) Standard prime cost

$2.28 5.55 $7.83

During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:

Direct materials $ 63,000
Direct labor $163,385 (for 22,450 hrs.)

Required:

Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.

Material Variances

Price variance $ Usage variance $ Labor Variances
Rate variance $ Efficiency variance $

Explanation / Answer

Particulars Standard Actual Qty Rate amount Qty Rate amount Materials            72,000.00                      0.95            68,400.00            79,500.00                  0.7925            63,000.00 Labour            22,500.00                  7.4000         166,500.00            22,450.00                  7.2777         163,385.00 Actual output            30,000.00 Materials reqd(30,000 * 2.4)            72,000.00 Labour hrs reqd(30, 000 *.75)            22,500.00 DMPV = (SP-AP)*AQ DMPV = (.95 - .7925)79,500 DMPV = 12,525 F DMUV= (SQ-AQ)SP DMUV= (72,000 - 79,500).95 DMUV= 7,125 U DLRV= (SR-AR)AH DLRV= (7.40 - 7.2777)22,450 DLRV= 2,745 F DLEV = (SH-AH)SR DLEV = (22,500 - 22,450)7.40 DLEV = 370 F

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