Trueform Products, Inc., produces a broad line of sports equipment and uses a st

Question

Trueform Products, Inc., produces a broad line of sports equipment and uses a standard cost system for control purposes. Last year the company produced 4,900 varsity footballs. The standard costs associated with this football, along with the actual costs incurred last year, are given below (per football) Standard Actual Cost Cost Direct materials $13.86 Standard: 4.2 feet at $3.30 per foot Actual: 4.7 feet at $3.10 per foot $14.57 Direct labor: 7.35 Standard: 1.50 hours at $4.90 per hour Actual: 1.30 hours at $5.60 per hour 7.28 Variable manufacturing overhead 2.85 Standard: 1.50 hours at $1.90 per hour Actual: 1.30 hours at $2.70 per hour 3.51 Total cost per football $24.06 $25.36 The president was elated when he saw that actual costs exceeded standard costs by only $1.30 per football. He stated, "l was afraid that our unit cost might get out of hand when we gave out those raises last year in order to stimulate output. But it's obvious our costs are well under control." There was no inventory of materials on hand to start the year. During the year, 23,030 feet of materials were purchased and used in production Required 1. For direct materials a. Compute the price and quantity variances for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Price variance Quantity variance

Explanation / Answer

1)Material price variance =AQ[AR-SR]

= 23030 [3.1-3.3]

= 23030 *-.2

= - 4606 F

Material quantity variance =SR[AQ-SQ]

= 3.3[23030-(4900*4.2)]

= 3.3[23030- 20580]

= 8085 U

2)Labor rate variance =AH[AR-SR]

=6370[5.6-4.9]

= 4459 U

**AH =4900*1.3=6370

Labor efficiency variance =SR[AH-SH]

4.9[6370-(4900*1.5)]

4.9[6370-7350]

- 4802 F

c)variable overhead rate variance =AH[AR-SR]

=6370[2.7-1.9]

= 5096U

Variable overhead efficiency variance =SR[AH-SH]

= 1.9[6370-7350]

=-1862 F

Account debit credit Raw material inventory [4900*13.86] 67914 Material quantity variance 8085 material price variance 4606 Accounts payable [4900*14.57] 71393

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