Problem 25-3A
Rudd Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2017, 10,600 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 15,000 direct labor hours. All materials purchased were used.
Cost ElementStandard (per unit)ActualDirect materials8 yards at $4.10 per yard$332,670 for 85,300 yards ($3.90 per yard)Direct labor1.20 hours at $13.00 per hour$179,816 for 13,520 hours ($13.30 per hour)Overhead1.20 hours at $6.50 per hour (fixed $4.00; variable $2.50)$48,300 fixed overhead $36,500 variable overheadOverhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $60,000, and budgeted variable overhead was $37,500.(a)
Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to 0 decimal places, e.g. 125.)
(1)Total materials variance$ FavorableUnfavorableNeither favorable nor unfavorableMaterials price variance$ Neither favorable nor unfavorableUnfavorableFavorableMaterials quantity variance$ Neither favorable nor unfavorableUnfavorableFavorable(2)Total labor variance$ FavorableNeither favorable nor unfavorableUnfavorableLabor price variance$ FavorableUnfavorableNeither favorable nor unfavorableLabor quantity variance$ UnfavorableNeither favorable nor unfavorableFavorable(b)
Compute the total overhead variance.
Total overhead variance$ UnfavorableFavorableNeither favorable nor unfavorable
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