This Question: 6 pts 24 of 28 (O complete) This Test: 100 pts possible Bargain F

Question

This Question: 6 pts 24 of 28 (O complete) This Test: 100 pts possible Bargain Fender, which uses a standard cost system, manufactured 20,000 boa labor hours thal cost $13.00 per hour. The direct maneriais standard was seven square feet of vinyl per tender, at a standard cost of $1 55 per square foot The labor standard was 0 025 drect lsoor hour per fendr a' a standard cost or %1200per hour fenders during 2018, using 141,000 square feet of extruded vinyl purchased at $1.50 per square toot Production required 443 dred Read the tequirement Begin with the cost variances Select the reqaired formulas, compute the cost variances for dieect materials and direct labor, and identfy wheher each variance is avorable(F) ar unfavcrable u) Abbneviations used AC . aal AQ . a tual quatty, FCH: fined overhead. SC-standard cost sa sanded oonity Formula Variance Direct maherws vanance Deect labor cost variance Select the required formuias, compute the efficiency varances for direct materials and direct iabor, and identty whether each variance is fevorable (F) or untavorable (U) (Abbrevietons used AC actual cost, AQ actuai quanty, FOH tted overhead. SC-standad cost sa-standard qurnty.) Formula Variance Direct materials efficiency variance Direct labor efficiency arance Ooes the pattern of variances supgest Bergain Fender's managers have been making trade-cms? Expian te ierey varwoe sugge. tat manage, may have used drect materials direct materias cost vanance otal direct materials variance is "workers who performed more direct labor efficiency vanance suggests that masagers may have used deect lnbor cost variance combined with the Choose from any list or enter any number in the input felds and then coninue to the next queston

Explanation / Answer

Material price variance AP (a) SP (b) Variance (c=b-a) AQ (d) Total variance (e=c*d) F/U Material price variance = (AP-SP)*AQ AP = Actual price per quantity = $1.50 SP = Standard price per quantity = $1.55 AQ = Actual quantity consumed = 1,41,000 F= Favourable U = Unfavourable Material price variance AP (a) SP (b) Variance (c=b-a) AQ (d) Total variance (e=c*d) F/U $                        1.50 $                     1.55 0.05     1,41,000 7,050 F Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U Material quantity variance = (AQ-SQ)*SP AQ = Actual quantity consumed = 1,41,000 SQ = Standard quantity = 2,00,000 * 7 = 1,40,000 SP = Standard price per quantity = $1.55 F= Favourable U = Unfavourable Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U                    1,41,000                 1,40,000 -1000 $         1.55 -1,550 U Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U Labor Rate variance = (AR-SR)*AH AR = Actual Rate per hour = $13 SR = Standard Rate per hour = $12 AH = Actual hours = 440 F= Favourable U = Unfavourable Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U $                      13.00 $                   12.00 -1.00 440 -440 U Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) AR (d) Total variance (e=c*d) F/U Labor Efficiency variance = (AH-SH)*AR AH = Actual hours = 440 SH = Standard Hours = 20,000 / (1/0.025) = 500 SR = Standard Rate per hour = $12 1 / 0.025 = 40 Fenders in one hour F= Favourable U = Unfavourable Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) SR (d) Total variance (e=c*d) F/U                              440                           500 60 $       12.00 720 F Yes. The Bargain Fender's Manager have been making trade-offs. As one side of the variance is unfavourable, he makes another side favourable to the company. And he brings a better position to the company by making a favourable position in overall variance.

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