Outdoor Company manufactures camping tents from a lightweight synthetic fabric.

Question

Outdoor Company manufactures camping tents from a lightweight synthetic fabric. Each tent has a standard materials cost of $21, consisting of 4 yards of fabric at $5.25 per yard. The standards call for 2 hours of assembly at $10 per hour. The following data were recorded for October, the first month of operations:

Direct labor used

(a) Compute all standard cost variances for materials and labor.

(b) Determine the standard variable cost of 1,700 tents produced, separated into direct materials and labor.

3,600 hours x $10.75 per hour

Labor efficiency variance (b) Determine the standard variable cost of 1,700 tents produced, separated into direct materials and labor.

Fabric purchased 9,000 yards x $ 5.00 per yard Fabric used in production of 1,700 tents 7,000 yards

Direct labor used

(a) Compute all standard cost variances for materials and labor.

Materials price variance (usage basis) $Answer Answer

(b) Determine the standard variable cost of 1,700 tents produced, separated into direct materials and labor.

Direct materials $Answer Direct labor $Answer Total standard variable cost $Answer Materials price variance (purchase basis) $Answer Answer Materials quantity variance $Answer Answer Labor rate variance $Answer Answer Labor efficiency variance $Answer Answer

3,600 hours x $10.75 per hour

Explanation / Answer

Standard Costs Qty/Hr Rate Cost   Direct Materials                   4.00                       5.25                        21.00 Direct Labor                   2.00                     10.00                        20.00 Total                        41.00 Standard Variable cost for 1700 tents Standard Costs Unit Per unit Cost Total Cost Direct Materials                 1,700                     21.00                     35,700 Direct Labor                 1,700                     20.00                     34,000 Total Variable costs                     69,700 Actual Information Details Actual units Actual Qty/Hr Actual Rate Actual Amt Std Qty/Hr Actual Output Direct Materials                 1,700                     7,000                          5.00            35,000             6,800 Direct Labor                 1,700                     3,600                        10.75            38,700             3,400 Direct Materials Price Variance= Actual Qty Used( Actual Rate-Std Rate) =7000*(5-5.25)                 1,750 (F) Direct Material Efficiency Variance =Std Rate ( Actual Qty used-Std qty for actual output)      =5.25*(7000-6800)                 1,050 (U) Direct Labor Rate Variance= Actual Hrs Used( Actual Rate-Std Rate) =3600*(10.75-10)                 2,700 (U) Direct LAbor Efficiency Variance =Std Rate ( Actual Hrs used-Std Hrs for actual output)   =10*(3600-3400)                 2,000 (U)

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