Tipton Company manufactures shirts. During June, Tipton made 1,200 shirts and gathered the following additional data: Direct materials cost standard $6.00 per yard of fabric Direct materials efficiency standard 1.50 yards per shirt Actual amount of fabric purchased and used 1,680 yards Actual cost of fabric purchased and used $10,500 Direct labor cost standard $15.00 per DLHr Direct labor efficiency standard 2.00 DLHr per shirt Actual amount of direct labor hours 2,520 DLHr Actual cost of direct labor $36,540 7. Calculate the directmaterials cost variance. Select the formula, then enter the amounts and compute the cost variance for direct materials and identify whether the variance is favorable (F) or unfavorable (U). ( - ) × = Direct Materials Cost Variance ( - ) × = 8. Calculate the direct materials efficiency variance. Select the formula, then enter the amounts and compute the efficiency variance for direct materials and identify whether the variance is favorable (F) or unfavorable (U). ( - ) × = Direct Materials Efficiency Variance ( - ) × = 9. Calculate the total direct materials variance and identify whether the variance is favorable or unfavorable. The total direct materials variance is .
Tipton Company manufactures shirts. During June, Tipton made 1,200 shirts and gathered the following additional data: Direct materials cost standard $6.00 per yard of fabric Direct materials efficiency standard 1.50 yards per shirt Actual amount of fabric purchased and used 1,680 yards Actual cost of fabric purchased and used $10,500 Direct labor cost standard $15.00 per DLHr Direct labor efficiency standard 2.00 DLHr per shirt Actual amount of direct labor hours 2,520 DLHr Actual cost of direct labor $36,540 7. Calculate the directmaterials cost variance. Select the formula, then enter the amounts and compute the cost variance for direct materials and identify whether the variance is favorable (F) or unfavorable (U). ( - ) × = Direct Materials Cost Variance ( - ) × = 8. Calculate the direct materials efficiency variance. Select the formula, then enter the amounts and compute the efficiency variance for direct materials and identify whether the variance is favorable (F) or unfavorable (U). ( - ) × = Direct Materials Efficiency Variance ( - ) × = 9. Calculate the total direct materials variance and identify whether the variance is favorable or unfavorable. The total direct materials variance is .
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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Question
Tipton Company manufactures shirts. During June, Tipton made 1,200
shirts and gathered the following additional data:
shirts and gathered the following additional data:
Direct materials cost standard
$6.00 per yard of fabric
Direct materials efficiency standard
1.50 yards per shirt
Actual amount of fabric purchased and used
1,680 yards
Actual cost of fabric purchased and used
$10,500
Direct labor cost standard
$15.00 per DLHr
Direct labor efficiency standard
2.00 DLHr per shirt
Actual amount of direct labor hours
2,520 DLHr
Actual cost of direct labor
$36,540
7. Calculate the directmaterials cost variance. Select the formula, then enter the amounts and compute the cost variance for direct materials and identify whether the variance is favorable (F) or unfavorable (U).
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-
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×
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=
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Direct Materials Cost Variance
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(
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-
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)
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×
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=
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8. Calculate the direct materials efficiency variance.
Select the formula, then enter the amounts and compute the efficiency variance for direct materials and identify whether the variance is favorable (F) or unfavorable (U).
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(
|
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-
|
|
)
|
×
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=
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Direct Materials Efficiency Variance
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(
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-
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)
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×
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=
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9. Calculate the total direct materials variance and identify whether the variance is favorable or unfavorable.
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The total direct materials variance is
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.
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