E9-8 (Algo) Calculating Direct Materials Variances [LO 9-3] Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable manufacturing overhead (based on direct labor hours). Fixed manufacturing overhead ($599,040 936,000 units) Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,300,000 12,700,000 $ 13,970,000 Required: Calculate Parker Plastic's direct materials price and quantity variances. Direct Material Price Variance Direct Material Quantity Variance 334,000 $ 4,141,600 $ 1,620,000 $ 391,000 F U Standard Quantity 8 square foot 0.3 hour 0.3 hour Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). 4 Standard Price (Rate). $ 1.20 per square foot $ 13.30 per hour $ 2.40 t per hour Standard Unit Cost $ 9.60 3.99 0.72 0.64
E9-8 (Algo) Calculating Direct Materials Variances [LO 9-3] Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable manufacturing overhead (based on direct labor hours). Fixed manufacturing overhead ($599,040 936,000 units) Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,300,000 12,700,000 $ 13,970,000 Required: Calculate Parker Plastic's direct materials price and quantity variances. Direct Material Price Variance Direct Material Quantity Variance 334,000 $ 4,141,600 $ 1,620,000 $ 391,000 F U Standard Quantity 8 square foot 0.3 hour 0.3 hour Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). 4 Standard Price (Rate). $ 1.20 per square foot $ 13.30 per hour $ 2.40 t per hour Standard Unit Cost $ 9.60 3.99 0.72 0.64
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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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![E9-8 (Algo) Calculating Direct Materials Variances [LO 9-3]
Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year.
follows:
Direct materials (plastic)
Direct labor
Variable manufacturing overhead (based on direct labor hours)
Fixed manufacturing overhead ($599,040 + 936,000 units).
Parker Plastic had the following actual results for the past year:
Number of units produced and sold
Number of square feet of plastic used
Cost of plastic purchased and used
Number of labor hours worked
Direct labor cost
Variable overhead cost
Fixed overhead cost
1,300,000
12,700,000
$ 13,970,000
Required:
Calculate Parker Plastic's direct materials price and quantity variances.
Direct Material Price Variance
Direct Material Quantity Variance
334,000
$ 4,141,600
$ 1,620,000
$ 391,000
F
U
Standard Quantity
8 square foot
0.3 hour
0.3 hour
Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (i.e., zero variance).
Standard Price (Rate)
$ 1.20
per square foot
per hour
$ 13.30
$2.40
per hour
Standard Unit
Cost
$9.60
3.99
0.72
0.64](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F43c74623-d722-4277-b33e-b02f0ab0d49d%2Fa1d403d3-03ed-45ab-b6d1-991c922f34dc%2F91x6jz_processed.jpeg&w=3840&q=75)
Transcribed Image Text:E9-8 (Algo) Calculating Direct Materials Variances [LO 9-3]
Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year.
follows:
Direct materials (plastic)
Direct labor
Variable manufacturing overhead (based on direct labor hours)
Fixed manufacturing overhead ($599,040 + 936,000 units).
Parker Plastic had the following actual results for the past year:
Number of units produced and sold
Number of square feet of plastic used
Cost of plastic purchased and used
Number of labor hours worked
Direct labor cost
Variable overhead cost
Fixed overhead cost
1,300,000
12,700,000
$ 13,970,000
Required:
Calculate Parker Plastic's direct materials price and quantity variances.
Direct Material Price Variance
Direct Material Quantity Variance
334,000
$ 4,141,600
$ 1,620,000
$ 391,000
F
U
Standard Quantity
8 square foot
0.3 hour
0.3 hour
Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (i.e., zero variance).
Standard Price (Rate)
$ 1.20
per square foot
per hour
$ 13.30
$2.40
per hour
Standard Unit
Cost
$9.60
3.99
0.72
0.64
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