Flexible Budgeting and Variance Analysis I'm Really Cold Coat Company makes women's and men's coats. Both products require filler and lining material. The following planning information has been made available: Standard Amount Standard Amount per Unit Women's Coats per Unit Men's Coats Filler Liner Standard labor time Planned production Standard labor rate. I'm Really Cold Coat Company Actual production Filler Liner 4.0 lbs. 7.00 yds. 0.40 hr. Actual Price per Unit $1.90 per lb. 8.20 per yd. 5.20 lbs. 9.40 yds. 0.50 hr. Women's Coats Men's Coats 5,000 units 6,200 units $14.00 per hr. $13.00 per hr. does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, I'm Really Cold Coat Company experienced the following actual results: Women's Coats 4,400 48,000 85,100 Men's Coats Actual Quantity Purchased and Used 5,800 Actual Labor Rate Women's coats $14.10 per hr. Men's coats 13.30 per hr. The expected beginning inventory and desired ending inventory were realized. Actual Labor Hours Used 1,825 2,800 Standard Price per Unit $2.00 per lb. 8.00 per yd. Required: 1. Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year: a. Direct materials price variance, direct materials quantity variance, and total variance.
Flexible Budgeting and Variance Analysis I'm Really Cold Coat Company makes women's and men's coats. Both products require filler and lining material. The following planning information has been made available: Standard Amount Standard Amount per Unit Women's Coats per Unit Men's Coats Filler Liner Standard labor time Planned production Standard labor rate. I'm Really Cold Coat Company Actual production Filler Liner 4.0 lbs. 7.00 yds. 0.40 hr. Actual Price per Unit $1.90 per lb. 8.20 per yd. 5.20 lbs. 9.40 yds. 0.50 hr. Women's Coats Men's Coats 5,000 units 6,200 units $14.00 per hr. $13.00 per hr. does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, I'm Really Cold Coat Company experienced the following actual results: Women's Coats 4,400 48,000 85,100 Men's Coats Actual Quantity Purchased and Used 5,800 Actual Labor Rate Women's coats $14.10 per hr. Men's coats 13.30 per hr. The expected beginning inventory and desired ending inventory were realized. Actual Labor Hours Used 1,825 2,800 Standard Price per Unit $2.00 per lb. 8.00 per yd. Required: 1. Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year: a. Direct materials price variance, direct materials quantity variance, and total variance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Qw.21.
Transcribed Image Text:Flexible Budgeting and Variance Analysis
I'm Really Cold Coat Company makes women's and men's coats. Both products require filler and lining material. The following planning information has been made available:
Standard Amount Standard Amount
per Unit
Women's Coats
per Unit
Men's Coats
Filler
Liner
Standard labor time
Planned production
Standard labor rate
Actual production
Filler
Liner
4.0 lbs.
7.00 yds.
0.40 hr.
Women's Coats
Men's Coats
5,000 units
6,200 units
$13.00 per hr.
$14.00 per hr.
I'm Really Cold Coat Company does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, I'm Really Cold Coat Company experienced the following actual results:
Women's Coats
Men's Coats
Actual Price per Unit
$1.90 per lb.
8.20 per yd.
4,400
5.20 lbs.
9.40 yds.
0.50 hr.
48,000
85,100
5,800
Actual Quantity Purchased and Used
Actual Labor Rate
Women's coats
$14.10 per hr.
Men's coats
13.30 per hr.
The expected beginning inventory and desired ending inventory were realized.
Actual Labor Hours Used
1,825
2,800
Standard Price
per Unit
$2.00 per lb.
8.00 per yd.
h Direct labor rato variance direct labor time variance and total variance
Required:
1. Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year:
a. Direct materials price variance, direct materials quantity variance, and total variance.
Transcribed Image Text:Required:
1. Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year:
a. Direct materials price variance, direct materials quantity variance, and total variance.
b. Direct labor rate variance, direct labor time variance, and total variance.
Round your answers to two decimal places, if necessary. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
a.
Direct materials price variance
Direct materials quantity variance
Total direct materials cost variance
$
$
$
b.
Direct labor rate variance
Direct labor time variance
Total direct labor cost variance
2. The variance analyses should be based on the
amounts at
volumes. The budget must flex with the volume changes. If the
was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the
separated from efficiency and price variances.
$
volume is different from the planned volume, as it
production. In this way, spending from volume changes can be
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