This Question: 8 pts 34of39(37 complete) This Test: 125 pts possible Question He

Question

This Question: 8 pts 34of39(37 complete) This Test: 125 pts possible Question Help Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 143,000 square feet of extruded vinyl purchased at $1.30 per square foot. Production required 400 direct labor hours that cost $16.00 per hour. The direct materials standard was seven squane feet of viny per fender, at a standard cost of $1.35 per square foot. The labor standard was 0.028 direct labor hour per fender, at a standard cost of s1500 per hour Read the requirement Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each standard quantity) Direct materials cost variance- e F) or unfavorable (U (Abbreviations used: AC-actual cost; Aa·actual quantity: FOH·fixed overhead SC standard ost sa- Formula Variance Direct labor cost variance Select the required formulas, compute the efficiency vaniances for direct matorials and direct labor, and identfy whethor each variance is favorable (F) or unfavorable (U) (Abbreviations used: AC-actual cost AQ-actual quantity: FOH·fixed overhead, SC . standard cost, SQ a standard quantity ) Formula Variance Direct materials efficiency varlance Direct labor efficiency variance Does uie pattern of variances supgest Matthews Fender's managers have beon making trade-offs? Explain | direct materials cost vananoo combined witn the direct matorials efficiency variance suggests that managers may have used I diroct materials. The net ofect on the total doct matonais varianoo- The | direct labor cost variance cont nod wth the | d rect labor efficiency vanance suggests that managers may have used workers who performed more efficiently The not effect on the total direct labor variance is any number in the input fields and then continue to the next question

Explanation / Answer

1 Direct material cost variance (AC-SC)*AQ (1.3per sq. ft. - 1.35 per sq. ft) *143,000 sq. ft. = 7150 F 2 Direct labor cost variance (AC-SC)*AQ (16-15)*400 400U 3 Direct Materials Efficiency Variance (AQ-SQ)*SC (143000-140000)*1.35 4050 U * 7 sq. feet per fender × 20,000 fenders = 140,000 standard sq. feet 4 Direct Labor Efficiency Variance (AQ-SQ)*SC (400-560)*15 2400F 0.028 DLHr per fender × 20,000 fenders = 560 standard DLHr

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