Question

Standard Cost and Flexible Budget. Brier Company produces car covers. The company's master budget shows the following standards information. Expected production for September 5,000 units 29. Direct materials 8 yards per unit at $5 per yard Direct labor 3 hours per unit at $16 per hour Variable manufacturing overhead Required: a. Caleulate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead using the format shown in Figure 10.1. 3 direct labor hours per unit at $2 per hour b. Assume Brier Company produced 5,100 car covers during the month of September. Prepare a flexible budget for direct materials, direct labor, and variable manufacturing overhead using the format shown in Figure 10.2. 30. Materials and Labor Variances. Brier Company produces car covers. (This is the same company as the previous exercise. This exercise can be assigned independently.) For direct materials, the standard price for i yard of material is $5 per yard. A standard quantity of 8 yards of material is expected to be used for each car cover produced. During September, Brier Company purchased 45,000 yards of material for $238,500 and used 39,000 yards to produce 5,10o0 car covers. For direct labor, Brier Company established a standard number of direct labor hours at three hours per car cover. The standard rate is $16 per hour. A total of 14,700 direct labor hours were worked during September, at a cost of $238,140, to produce 5,100 car covers. Required: a. Calculate the materials price variance and materials quantity variance using the format shown in Figure 10.4. Clearly label each variance as favorable or unfavorable. b. Calculate the labor rate varianee and labor efficiency variance using the format shown in Figure 10.6. Clearly label each variance as favorable or unfavorable.

Answer 1

Answer is given below with all working

29. a Standard cost per unit calculation Direct Material $40.00 Direct Labor Variable Overhead $48.00 $6.00 Standard variable production cost per unit $94.00 Flexible Budget at 29. b) Flexible Budget 5,100 units $204,000 $244,800 $30,600 $479,400 Direct Material Direct Labor Variable Overhead Standard variable production cost per unit 30 a) Direct Material Variances -$13,500 Unfavourable Direct Material Price Variance $9,000 Favourable Direct Material Quantity Variance Direct Material Price Variance (Standard Rate Actual Rate)*Actual Quantity Direct Material Quantity Variance (Standard Quantity for Actual production - Actual Quantity) Standard Rate Working note Actual Material cost Actual Quantity at Standard rate Standard Material Costs Actual Actual Actual Standard Standard Standard Quantity Quantity Rate Rate Quantity Rate $5.30 $238,500 Actual Qty at Standard rate $5.00 $204,000 $5.00 $195,000 Standard Qty at Std rate 40,800 45,000 39,000 Actual Quantity at Actual Rate Direct Material Direct Material -$13,500 Unfavourable $9,000 Favourable Quantity variance price variance Total Direct Material cost Variance -$4,500 Unfavourable 30 b) Direct Labor Variance -$2,940 Unfavourable Direct Labor Rate Variance $9,600 Favourable Direct Labor Efficiency Variance Direct Labor Rate Variance= ( Standard Rate Actual Rate) Actual hours Direct Labor Efficiency Variance (Standard hours for Actual production - Actual hours) Standard Rate Working note Actual Labor costs Actual Hours at Standard rate Standard Labor cost Actual Actual Standard Standard Standard Actual Hours hours X Rate Hours х Rate X Rate $16.00 $235.200 Standard hours at std rate $16.20 $238,140 Actual labor hours at std rate $16.00 14,700 14,700 15,300 Actual labor hours at actual rate $244,800 Direct Labor Rate Direct Labor -$2,940 Unfavourable $9,600 Favourable Variance Efficiency Variance $6,660 Favourable Total Direct Labor Cost variance