A. How many metres of fabric were used? (Hint: Metres used was not the same as the metres purchased.) B. What was the materials price variance? C. What was the actual direct labour rate?
A. How many metres of fabric were used? (Hint: Metres used was not the same as the metres purchased.) B. What was the materials price variance? C. What was the actual direct labour rate?
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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Transcribed Image Text:11.43 Cost Variance Analysis The following information is available for ConcertWearShirts:
Direct Materials
Direct Labour
Variable Overhead
Fixed Overhead
Standard Quantity
3 metres
2 hours
2 machine hours
2 machine hours
Standard Cost Total Standard Cost
$12.00/metre
$36.00
$10.00/hour
$20.00
$6.00
$2.00
$64.00
$3.00/machine hour
$1.00/machine hour
The normal production level is 300 shirts. This production period ConcertWear produced 280 shirts. ConcertWear purchased 900
metres of fabric for $9,720. The variances for the production period are:
Materials Price Variance
Materials Quantity Variance
Labour Rate Variance
Labour Efficiency Variance
VOH Spending Variance
VOH Efficiency Variance
FOH Budget Variance
FOH Volume Variance
D. What was the actual variable overhead rate?
E. How many machine hours were used?
F. What was the master budget amount for fixed overhead?
?
$ 336 U
$ 532 U
$ 280 F
$98 F
$ 210 F
$ 110 F
$ 40 U
REQUIRED
A. How many metres of fabric were used? (Hint: Metres used was not the same as the metres purchased.)
B. What was the materials price variance?
C. What was the actual direct labour rate?
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