Hopkins Clothiers is a small company that manufactures tail-men\'s suits. The co
ID: 2498884 • Letter: H
Question
Hopkins Clothiers is a small company that manufactures tail-men's suits. The company has used a standard cost accounting system. In May 2014, 10,800 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 16,500 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 $66,000, and budgeted variable overhead was $47,850. Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to O decimal places, e.g. 125.) Compute the total overhead variance.Explanation / Answer
(1) Total materials variance = material price variance + materials usage variance
= $13936 A + $3080 F
= $10856 A
Materials price variance = Actual Cost - Standard Cost of Actual Quantity
= $369304 - ( 87100 * $4.4)
= $13936 A
Materials quantity variance = ( Actual Quantity - Standard Quantity) x Standard Price
= [( 87100 - (10800 * 8)] * 4.4
= $3080 F
(2) Total labour variance = labour rate variance + labour efficiency variane
= $5916 F + $9750 F
= $15666 F
Labour rate variance = Actual Cost - Standard Cost of Actual Hours
= 198186 - ( 14790 *13)
= $5916 F
Labour quantity variance = (actual hours - standard hours) standard rate
= [14790 - (1.3 * 10800)] $13
= $9750 F
Fixed Overhead Total Variance = Actual Fixed Overheads - Absorbed Fixed Overheads
= Actual Fixed Overheads - Actual output * actual Absorption rate
= $48300 - (10800* 4)
= $5100 F
Variable overhead usage variance = standard hours * standard rate - actual hours * standard rate
= (14040 * 2.9) - (14790 *2.9)
= $2175 A
Total Overhead variance = $2175 A +$5100 F = $2195 F
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