This Question: 8 pts 9 of 39 (34 complete) This Test: 125 pts possible Question

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This Question: 8 pts 9 of 39 (34 complete) This Test: 125 pts possible Question Help Matthews 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 square feet of vinyl per fender, at a standard cost of S1.35 per square foot. The labor standard as 0.028 direct labor hour per fender, at a standard cost of $15.00 per hour. Read the requirement Begin with he cos variances select the equired formulas, compute he cost vanances for direct mate als and direct labor, and identity whether each variance s tavorable F or unfavorable Abbreviations used A act al cost AQ = a quantity, FOH fixed overhead, SC- standard cost, SO standard quantity.) Formula Variance Direct materials cost variance Direct labor cost variance -actual cost A : actual quantity FOH·fixed Select he required ormulas compute the efficiency variances or direct materials and drect labor and identify whether each variance s avorable F or unfavorable U). Abbrev ations used: A overhead, SC standard cost SQ-standard quantity.) Formula Variance Direct materials eftticiency variance Direct labor efficiency variance- Does the pattern of variances suggest Matthews Fenders managers have been making trade-offs? Explain The direct materials cost variance combined with the direct materials fficiency variance suggests that managers may have used V direct materials. The net effect on the total direct materials variance is The direct labor cost variance combined with the V direct labor efficiency variance suggests that managers may have used Vworkers who performed more efficiently. The net effect on the total direct labor variance is Choose from any list or enter any number in the input fields and then continue to the next question.

Explanation / Answer

Direct material:

Actual cost per fender = (143,000 x 1.30) / 20,000 = $9.295 per fender

Std cost = 7 x 1.35 = $ 9.45 per fender

Direct Labor:

Actual cost per fender = (400 x 16) / 20,000 = $ 0.32

Std labor cost per fender = 0.028 x 15 = $ 0.42

Direct material cost variance = (AC - SC) x AQ = (1.30 - 1.35) x 20000 = 1000 (F)

Direct labor cost variance = (16 - 15) x 20,000 = 2000 (U)

Direct materials efficiency variance = (143,000 - (20000 x 7)) x 1.35 = 4050 (U)

Direct labor efficiency variance = (400 - (20000 x .028)) x 15 = 2400 (F)

The favourable direct materials cost variance combined with the unfavourable direct materials efficiency variance suggests that managers may have used more direct materials. The net effect on the total direct materials variance is unfavourable.

The unfavourable direct labor cost variance combined with the favourable direct labor efficiency variance suggests that managers may have used less workers. The net effect on the total direct materials variance is favourable.

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