ames Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are as follows: Line Item Description Cost Direct materials (6 yards of fabric @ $3.00 per yard) $18.00 Direct labor (2.4 hours @ $8.00 per hour) 19.20 It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts. What is James's materials usage variance? a. $300,000 U b. $250,000 U c. $300,000 F d. $250,000 F
ames Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are as follows: Line Item Description Cost Direct materials (6 yards of fabric @ $3.00 per yard) $18.00 Direct labor (2.4 hours @ $8.00 per hour) 19.20 It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts. What is James's materials usage variance? a. $300,000 U b. $250,000 U c. $300,000 F d. $250,000 F
Chapter1: Financial Statements And Business Decisions
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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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James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are as follows:
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
What is James's materials usage variance?
| Line Item Description | Cost |
|---|---|
| Direct materials (6 yards of fabric @ $3.00 per yard) | $18.00 |
| Direct labor (2.4 hours @ $8.00 per hour) | 19.20 |
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
What is James's materials usage variance?
a. $300,000 U
b. $250,000 U
c. $300,000 F
d. $250,000 F
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