Rudd Clothiers is a small company that manufactures tall-men’s suits. The compan
ID: 2569663 • Letter: R
Question
Rudd Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2017, 11,000 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 13,500 direct labor hours. All materials purchased were used.
Cost Element
Standard (per unit)
Actual
Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $47,250, and budgeted variable overhead was $39,150.
(a)
Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to 0 decimal places, e.g. 125.)
(b)
Compute the total overhead variance.
Cost Element
Standard (per unit)
Actual
Direct materials 7 yards at $4.70 per yard $353,080 for 77,600 yards ($4.55 per yard) Direct labor 1.20 hours at $13.00 per hour $189,000 for 14,000 hours ($13.50 per hour) Overhead 1.20 hours at $6.40 per hour (fixed $3.50; variable $2.90) $48,000 fixed overhead $37,500 variable overheadExplanation / Answer
Req A-1 St material qty requird per unit of ouput = 7 yards Actual output 11000 units Std qty required for actual output (SQ) =( 11000*7) = 77,000 yards Std price per yard (SP) = $ 4.70 per yard Actual Qty consumed (AQ) = 77600 yards Actual Price per yard (AP) = $ 4.55 per yard Material Cost variance = SQ*SP - AQ *AP (77000*4.7-77600*4.55) = $ 8,820 fav Material Price Variance = AQ (SP - AP ) ( 77600 ( 4.70- 4.55) ) = $ 11,640 Fav Material Qty variance = SP (SQ -AQ) ( 4.70 ( 77000-77600)) = $ 2,820 Unfav Req A-2 St labour hours required per unit of output = 1.20 hours per unit Actual ouput 11,000 units Std labour hours for actual ouput (SH ) = (11000*1.20) = 13,200 hours Std labour rate per hour (SR) = $ 13 per hour Actual labour hours worked (AH) = 14,000 hours Actual rate per hour (AR ) = $ 13.50 per hour Labour cost variance = SR*SH - AR*AH (13*13200 - 13.50 *14000) = $ 17,400 Unfav Labour Rate variance = AH (SR -AR) ( 14000 (13-13.50)) = $ 7,000 unfav Labour Efficiency variance= SR (SH-AH) (13 (13200 -14000)) = $ 10,400 unfav Req B: Total Overhead variance Std Overhead rate per hour (SR) $ 6.40 per hour St hours allowed perunit of ouput 1.20 hours per unit Actual Output 11,000 units Std hours allowed for actual output (11,000*1.20) = 13,200 hours Std overhead cost allowed for actual output (13200 hours@6.40) = $84,480 Actual Overheads incurred (48000+37500) = $85,500 Total Overhead variance = Std overhead cost allowed for actual output - Actual overheasd incurred 84480 -85500 = $ 1,020 unfav
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