Panache Clothiers is a small company that manufactures tall-men\'s suits. The co
ID: 2498206 • Letter: P
Question
Panache Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2012 , 10,500 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,500 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 47,850 dollars and budgeted variable overhead was 36,250 dollars compute the total, price and quantity variances for (1) materials and (2) labor. Compute the total overhead variances.Explanation / Answer
Answer: 1 -1 Material Price variance
=( Actual Price *Actual quantity)-( Standard price* Actual quantity)
= 251931-4.10*63780
= 251931-261498
= 9567 Favorable
Answer 1-2 Material Quantity Variance
= ( Standard price* Actual quantity) -( Standard price* Standard quantity)
=4.10*63780-4.10*63000
= 261498-258300
= 3198 Unfaourable
Answer 2-1 Direct labor Rate Variance
= (AH*AR) -(AH*SR)
= 179096- 12360*14
= 179096-173040
= 6056 unfavorable
Answer 2- 2 Labour Quality Variance
= (AH*SR)- (SH*SR)
= (12360*14)-(11550*14)
= 173040-161700
= 11340 unfavorable
Answer-3 Overhead Variance
= Actual over head - standard overhead
= 85800-84100
= 1700 Unfavourable
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