Perfect Pet Collar Company makes custom leather pet collars. The company expects

Question

Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 2.20 feet of leather and predicts leather will cost $3.90 per foot. Suppose Perfect Pet made 70 collars during February. For these 70 collars, the company actually averaged 2.40 feet of leather per collar and paid $3.50 per foot.

Required:
1. Calculate the standard direct materials cost per unit. (Round your answer to 2 decimal places.)

per Collar

2. Without performing any calculati2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable.

3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable.

6. Calculate the direct materials price and quantity variances. (Round your intermediate calculations and final answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

per Collar

Explanation / Answer

1. Calculate the standard direct materials cost per unit - 2.20 feet of leather * cost $3.90 per foot = $ 8.58

2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable- Favourable ( since Standard price is more than Actual price )

3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable- Un-Favourable ( since Standard quantity is less than Actual Quantity )

6. Calculate the direct materials price and quantity variances.

Direct Material Price Variance = ( SP - AP ) * AQ purchased

( 3.9 - 3.5 ) * 70 * 2.4 = $ 67.20 ( Fav.)

Direct Material Quantity Variance = ( SQ - AQ ) * SP

( 2.2 - 2.4 ) * 70 * 3.90 = $ 54.6 ( unfav. )

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.