Rudd Clothiers is a small company that manufactures tall-men’s suits. The compan
ID: 2467290 • Letter: R
Question
Rudd Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2017, 11,250 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.
Cost Element
Standard (per unit)
Actual
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.
(a)
Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to 0 decimal places, e.g. 125.)
(b)
Compute the total overhead variance.
Cost Element
Standard (per unit)
Actual
Direct materials 8 yards at $4.40 per yard $375,575 for 90,500 yards ($4.15 per yard) Direct labor 1.2 hours at $13.40 per hour $200,925 for 14,250 hours ($14.10 per hour) Overhead 1.2 hours at $6.10 per hour (fixed $3.50; variable $2.60) $49,000 fixed overhead $37,000 variable overheadExplanation / Answer
(a) (1) Actual Production 11250 Standard Quantity of Direct Material Required per unit 8 Standard Quantity of Direct Material required (SQ) (11250*8) 90000 Standard Price per Yard (SP) 4.4 Actual Direct Material (AQ) 90500 Acual Price per Pound (AP) 4.15 Total Material Variance = (SP*SQ)-(AP*AQ) (4.40*90000)-(4.15*90500) 20425 Direct Material Price Variance=AQ*(SP-AP): 90500*(4.40-4.15) 22625 Favourable Direct materials quantity variance SP*(SQ-AQ) : 4.40*(90000-90500) -2200 Unfavourable (a) (2) Actual Production 11250 Standard Hours Required per unit 1.2 Standard Hours required (SH) (11250*1.20) 13500 Standard Rate per Hour (SR) 13.4 Actual Hours required (AH) 14250 Actual Rate per Hour (AR) 14.1 Total Labour Variance = (SR*SH)-(AR*AH) (13.40*13500)-(14.10*14250) -20025 Unfavourable Dircet Labour RateVariance=AH*(SR-AR): 14250*(13.40-14.10) -9975 Unfavourable Direct Labour efficiency variance SR*(SH-AH) : 13.40*(13500-14250) -10050 Unfavourable (b) Actual Production 11250 Standard Hours Required per unit 1.2 Standard Hours required (SH) 13500 Standard Rate per Hour (SR) 6.1 Actual Overhead Cost (AR*AH) (49000+37000) 86000 Total Overhead Variance = (SR*SH)-(AR*AH) (6.10*13500)-(86000) -3650 Unfavourable
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