A6 Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 28,000 yards of fabric costing$3.05 per yard and incurring direct labor costs of $17,766 for 3,290 hours of direct labor. The standard cost per pillowcaseassumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour.Required:a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases inMay.b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May.Note: For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None"and enter "O" for no effect (i.e., zero variance). Do not round your intermediate values. Round your answers to 2 decimalplaces.a. Materials price variancea. Materials quantity varianceb. Labor rate varianceb. Labor efficiency variance

Name: A6 Nolan Mills uses a standard cost system. During May, Nolan manufact
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Description: A6 Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 28,000 yards of fabric costing$3.05 per yard and incurring direct labor costs of $17,766 for 3,290 hours of direct labor. The standard cost per pillo

Variance analysis is a financial management technique that looks at how an organization's actual…

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05 per yard and incurring direct labor costs of $17,766 for 3,290 hours of d umes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor a quired: Compute both the price variance and quantity variance relating to direct m May. Compute both the rate variance and efficiency variance for direct labor cos Note: For all requirements, Indicate the effect of each variance by select and enter "O" for no effect (i.e., zero variance). Do not round your interm places

05 per yard and incurring direct labor costs of $17,766 for 3,290 hours of d umes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor a quired: Compute both the price variance and quantity variance relating to direct m May. Compute both the rate variance and efficiency variance for direct labor cos Note: For all requirements, Indicate the effect of each variance by select and enter "O" for no effect (i.e., zero variance). Do not round your interm places

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 28,000 yards of fabric costing
$3.05 per yard and incurring direct labor costs of $17,766 for 3,290 hours of direct labor. The standard cost per pillowcase
assumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour.
Required:
a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases in
May.
b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May.
Note: For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None"
and enter "O" for no effect (i.e., zero variance). Do not round your intermediate values. Round your answers to 2 decimal
places.
a. Materials price variance
a. Materials quantity variance
b. Labor rate variance
b. Labor efficiency variance

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