Answered: Rubble, Inc. produced 1,180 backpacks,…

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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Question

Rubble, Inc. produced 1,180 backpacks, the company's product in 2020. The standard cost was 4 yards of cloth at a standard cost of $1.00 per yard. The accounting records show that 2,900 yards of cloth were used, and the company paid $1.05 per yard. Standard time to make the backpacks was 2 direct labor hours per unit at a standard rate of $9.65 per direct labor hours. Employees worked a total of 1,600 hours and were paid $9.15 per hour.

Calculate the direct materials cost variance.

(AC
?
SC)
?
AQ
=
Direct
Materials
Cost
Variance
Favorable or
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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