Kelly Fabrics manufactures a specialty monogrammed blanket. The following are th

Question

Kelly Fabrics manufactures a specialty monogrammed blanket. The following are the cost standards for this blanket:

Direct Material (Fabric)………………. 4.0 yards per blanket at $7.00 per yard

Direct Labor…………………………… 1 direct labor hour per blanket at $13.00 per hour

Actual results from last month's production of 2,100 blankets are as follows:

Actual Cost of 9,450 yards of direct material (fabric) purchased …………… $ 60,480

Actual yards of direct material (fabric) used ………………………………….   $ 8,900

Actual Wages for 2.250 hours worked ………………………………………..   $ 27,450

Requirement.  

1.     Calculate the direct material price and quantity variances.

What is the standard direct labor cost for one blanket?

Explanation / Answer

Material price variance = Actual quantity*(Standard price - Actual price)
Actual quantity = 8900 yards
Standard price =$7
Actual price = $60480/9450 = $6.4 per yard
Material price variance = 8900*($7 -$6.40)
= 8900*0.60
= $5340F
Quantity variance = Standard price*(Standard quantity - Actual quantity)
Standard quantity for actual consumption = 2100*4 = 8400 yards
Actual quantity used = 8900 yards
Quantity variance = $7*(8400-8900)= $3500U

Standard direct labor cost per 1 blanket = $13/1 = $13 per blanket

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