Big Sur Water Sports, Inc., manufactures fiberglass boards used for riding the waves at the beach. The products are sold under the brand name Crazy Board. The standard cost for material and labor is $89.20 per board. This includes 8 kilograms of direct material at a standard cost of $5.00 per kilogram and 6 hours of direct labor at $8.20 per hour. The following data pertain to November:Purchases of material: 46,500 kilograms for $248,000Total actual direct labor costs: $301,490Actual hours of direct labor: 36,500 hoursProduction: 5,600 units1. Calculate the total direct materials variance2. Calculate the total direct labor varianceCheck Figures: Total Direct Materials Variance $23,845 Unfavorable Total Direct Labor Variance $25,970 Unfavorable

The standard cost of direct materials (SQSP) is deducted from the actual cost of direct materials…

Answered: Big Sur Water Sports, Inc.,…

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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Big Sur Water Sports, Inc., manufactures fiberglass boards used for riding the waves at the beach. The products are sold under the brand name Crazy Board. The standard cost for material and labor is $89.20 per board. This includes 8 kilograms of direct material at a standard cost of $5.00 per kilogram and 6 hours of direct labor at $8.20 per hour. The following data pertain to November:

Purchases of material: 46,500 kilograms for $248,000
Total actual direct labor costs: $301,490
Actual hours of direct labor: 36,500 hours
Production: 5,600 units

1. Calculate the total direct materials variance

2. Calculate the total direct labor variance

Check Figures:

Total Direct Materials Variance $23,845 Unfavorable

Total Direct Labor Variance $25,970 Unfavorable

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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