Rocky Mountain Camping Equipment, Inc. has established the following direct-material standards for its two products. Standard camping tent Deluxe backpacking tent Standard Quantity 14 yards 9 yards During March, the company purchased 5,400 yards of tent fabric for its standard model at a cost of $34,020. The actual March production of the standard tent was 240 tents, and 3,470 yards of fabric were used. Also during March, the company purchased 2,400 yards of the same tent fabric for its deluxe backpacking tent at a cost of $13,920. The firm used 2,880 yards of the fabric during March in the production of 320 deluxe tents. Standard Price $6.00 per yard $6.20 per yard Required: 1. Compute the direct-material purchase price variance and quantity variance for March. 2. Prepare journal entries to record the purchase of material, use of material, and incurrence of variances in March. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Compute the direct-material purchase price variance and quantity variance for March. (Do not calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Se effect (i.e., zero variance).) a. Direct-material purchase price variance b. Direct-material quantity variance Unfavorable Unfavorable
Rocky Mountain Camping Equipment, Inc. has established the following direct-material standards for its two products. Standard camping tent Deluxe backpacking tent Standard Quantity 14 yards 9 yards During March, the company purchased 5,400 yards of tent fabric for its standard model at a cost of $34,020. The actual March production of the standard tent was 240 tents, and 3,470 yards of fabric were used. Also during March, the company purchased 2,400 yards of the same tent fabric for its deluxe backpacking tent at a cost of $13,920. The firm used 2,880 yards of the fabric during March in the production of 320 deluxe tents. Standard Price $6.00 per yard $6.20 per yard Required: 1. Compute the direct-material purchase price variance and quantity variance for March. 2. Prepare journal entries to record the purchase of material, use of material, and incurrence of variances in March. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Compute the direct-material purchase price variance and quantity variance for March. (Do not calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Se effect (i.e., zero variance).) a. Direct-material purchase price variance b. Direct-material quantity variance Unfavorable Unfavorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Problem 10-46 Direct-Material Variances; Journal Entries (Appendix)
(LO 10-1, 10-3, 10-9)
Rocky Mountain Camping Equipment, Inc. has established the following direct-material
standards for its two products.
Standard camping tent
Deluxe backpacking tent
Standard Quantity
14 yards
9 yards
During March, the company purchased 5,400 yards of tent fabric for its standard model
at a cost of $34,020. The actual March production of the standard tent was 240 tents,
and 3,470 yards of fabric were used. Also during March, the company purchased 2,400
yards of the same tent fabric for its deluxe backpacking tent at a cost of $13,920. The firm
used 2,880 yards of the fabric during March in the production of 320 deluxe tents.
Standard Price
$6.00 per yard
$6.20 per yard
Required:
1. Compute the direct-material purchase price variance and quantity variance for March.
2. Prepare journal entries to record the purchase of material, use of material, and
incurrence of variances in March.
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Compute the direct-material purchase price variance and quantity variance for March. (Do not
calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Se
effect (i.e., zero variance).)
a. Direct-material purchase price variance
b. Direct-material quantity variance
Unfavorable
Unfavorable
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