d cost accounting system, manufactured 220,000 boat fenders during the year, usi

Question

d cost accounting system, manufactured 220,000 boat fenders during the year, using 1,860,000 m of extruded fender at a standard cost of $11.00 per hour Compute the price and efficiency variances for vinyl purchased at $1 35 per metre The labour standard was Deck Guard, which uses a standard Production required 4,100 direct labour hours that cost $12 00 per hour. The maternials standard was 8 m of 0 025 direct labour hour per suggest Deck Guards managers have been making trade-offs? Explain. standard was 8 m of vinyl per fender at a standard cost of $1.45 per metre T direct materials and direct labour Does the pattern of varian ces Begin ty determining the formula for the price variance, then compule the peice variances for cfirect materials each varlance as favourable (F) or unfavourable (U)) (OM) and drect labour (D (Enter the results as positive numbers. Label Actual price per put unit Standard price per input unit x Actual quantity of mput Price variance unit 135 12.00 1 45 11.00 ) x )x 1,860,000 4,100 $186,000F S4,100 Next, determine the formula for the effic Label each variance as favourable (F) or unfavourable (Ucy ces for Brect materials (OM and direct labour (DL.) (Enter the results as positive numbers ency vanance, then compute the et Eficiency variance

Explanation / Answer

Efficiency variance=(standard consumption-actual consumption)*standard rate

Direct Material efficiency variance=

Standard consumption of raw material= 8m×220000=1760000m

Efficiency variance=(1760000m-1860000m)*1.45= 145000 Unfavorable

Direct Labour efficiency Variance=

Standard Labour hours= 0.025 per hr*220000 =5500 hrs

Efficiency Variance= (5500-4100)*11= 15400 Favorable

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