Quality Guard, which used a standard cost accounting system, manufactured 200,000 boat fenders during the year, using 1,250,000 feet of extruded vinyl purchased at $1.20 per foot. Production required 4,000 direct labor hours that cost $12.50 per hour. The materials standard was 6 feet of vinyl per fender at a standard cost of $1.35 per foot. The labor standard was 0.026 direct labor hour per fender at a standard cost of $12.00 per hour. Read the requirements. Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials, DL= Direct labor.) Begin with the variances for direct materials. First, determine the formula for the direct materials price variance, then compute the price variance for direct materials. (Assume that the quantity of materials purchased is equal to the quantity of materials used.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Requirements
1. Compute the price and quantity variances for direct materials. Compute the
rate and efficiency variances for direct labor.
2.
Does the pattern of variances suggest that the company's managers have
been making trade-offs? Explain.
Print
Done
-
X
Transcribed Image Text:Requirements 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. Print Done - X
Quality Guard, which used a standard cost accounting system, manufactured 200,000 boat fenders during the year, using 1,250,000 feet of extruded vinyl purchased at $1.20 per foot. Production required 4,000 direct labor
hours that cost $12.50 per hour. The materials standard was 6 feet of vinyl per fender at a standard cost of $1.35 per foot. The labor standard was 0.026 direct labor hour per fender at a standard cost of $12.00 per hour.
Read the requirements.
Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. (Enter the variances as positive numbers. Enter currency amounts to the nearest
cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials, DL = Direct labor.)
Begin with the variances for direct materials. First, determine the formula for the direct materials price variance, then compute the price variance for direct materials. (Assume that the quantity of materials purchased is
equal to the quantity of materials used.)
x (
x (
=
DM price variance
Transcribed Image Text:Quality Guard, which used a standard cost accounting system, manufactured 200,000 boat fenders during the year, using 1,250,000 feet of extruded vinyl purchased at $1.20 per foot. Production required 4,000 direct labor hours that cost $12.50 per hour. The materials standard was 6 feet of vinyl per fender at a standard cost of $1.35 per foot. The labor standard was 0.026 direct labor hour per fender at a standard cost of $12.00 per hour. Read the requirements. Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials, DL = Direct labor.) Begin with the variances for direct materials. First, determine the formula for the direct materials price variance, then compute the price variance for direct materials. (Assume that the quantity of materials purchased is equal to the quantity of materials used.) x ( x ( = DM price variance
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Cost classification
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education