Goldman Company manufactures shirts. During June, Goldman made 1,300 shirts and

Question

Goldman Company manufactures shirts. During June, Goldman made 1,300 shirts and gathered the following additional data: (Click on the icon to view the data.) Read the reguirements 7. Calculate the direct materials cost variance Select the formula, then enter the amounts and compute the cost variance for direct materials and identfy whether the variance is favorable (F) or unfavorable (U). Direct Materials Cost Variance Requirements 8. Calculate the direct materials efficiency variance. Select the formula, then enter the amounts and compute the efficiency variance for direct materials and identify whether the variance is favorable (F) or unfavorable (U) Calculate the following variances: 7.Direct materias cost variance 8. Direct materials efficiency variance 9. Total direct materials variance 10. Direct labor cost variance 11.Direct labor efficiency variance 12. Total direct labor variance Direct Materials Efficiency Variance = 9. Calculate the total direct materials variance and identify whether the variance is favorable or unfavorable. The total direct materials variance is 10. Calculate the direct labor cost variance. Select the formula, then enter the amounts and compute the cost variance for direct laber and identify whether the variance is favorable (F) or unfavorable (U). Print Done Direct Labor Cost Variance Data Table 11. Calculate the direct labor efficiency variance. Direct materials cost standard Direct materials efficiency standard Actual amount of fabric purchased and used 2,700 yards Actual cost of fabric purchased and used $25,245 Direct labor cost standard Direct labor efficiency standard Actual amount of direct labor hours Actual cost of direct labor $9.00 per yard of fabric 2.20 yards per shirt Select the formula, then enter the amounts and compute the efficiency variance for direct labor and identify whether the variance is favorable (F) or unfavorable (U) - Direct Labor Efficiency Variance $18.00 per DLHr 3.00 DLHr per shirt 4,040 DLH S70,902 12. Calculate the total direct labor variance and identify whether the variance is favorable or unfavorable The total direct labor variance is Print Done

Explanation / Answer

Capturing the given data

Actual Production - 1300 Shirts

Direct Material Cost Standard (SP) - $ 9 per yard of fabric

Direct Material Efficency Standard - $ 2.2 yards per shirt

Actual Amount of Fabric Purchased (AQ) - 2700 yards

Actual cost of fabric purchased and used - 25,245

Direct Labor Cost Standard (SR) - 18 per DLHr

Direct Labor Efficiency - 3 DLHr per shirt

Actual Amount of Direct Labor hours (AH) - 4040 DLHr

Actual Direct Labor - 70,902

7) Calculating Direct Materials Cost Variance

Direct Materials Cost Variance = (SP-AP)*AQ

Acutal Price (AP) = Actual cost of Fabric purchased/Actual Amount of Fabric purchased

= 25245/2700 = 9.35

Direct Material Cost Variance = (SP-AP)*AQ

= (9 - 9.35)*2700

= -945 Unfavourable Variance

8. Direct Material Efficiency Variance

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

Standard Quantity = Actual Production*Standard Quantity per unit

= 1300*2.2 = 2,860

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

= 9*(2860 - 2700)

= 1,440 Favourable Variance

9) Total Direct Material Variance

Total Direct Material Variance = Direct Material Cost Variance + Direct Material Efficiency Variance

= -945 +1440

= 495 Favourable

10) Direct Labor Cost Variance

Direct Labor Cost Variance = AH*(SR - AR)

Actual Rate (AR) = Actual Cost of DL / Actual Amount of DL Hours

= 70902/4040

= 17.55

Direct Labor Cost Variance = AH*(SR - AR)

= 4040 (18-17.55)

= 1818 Favourable

11) Direct Labor Efficiency Variance

Direct Labor Efficiency Variance = (SH-AH)*SR

Standard Hours (SH) = Actual Production*Standard Hours per unit

= 1300*3

= 3900

Direct Labor Efficiency Variance = (SH-AH)*SR

= (3900-4040)*3

= -420 UnFavourable Variance

12) Total Direct Labor Variance

Total Direct Labor Variance = Direct Labor Cost Variance + Direct Labor Efficiency Variance

= 1818-420

= 1398 Favourable Variance

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