****PLEASE ONLY ANSWER E AND F**** Rain Gear, Inc., producesrain jackets. The master budget shows the following standardsinformation and indicates the company expected to produce and sell28,000 units for the year. Variable manufacturing overhead isallocated based on direct labor hours.
Direct materials | 4 yards per unit at $3 per yard |
Direct labor | 2 hours per unit at $10 per hour |
Variable mfg OH | 2 direct labor hours per unit at $4 per hour |
Rain Gear actually produced and sold30,000 units for the year. During the year, the company purchasedand used 130,000 yards of material for $429,000. A total of 65,000labor hours were worked during the year at a cost of $637,000.Variable overhead costs totaled $231,000 for the year.
- Provide a flexible budget of production costs for the year
Direct materials(30000*4*3)=360000
Direct labor (30000*2*10)= 600000
Variable manufacturing overhead(30000*2*4)= 240000
Total variable productioncosts= 1200000
- Calculate the materials price variance and materials quantityvariance. Enter your calculations into the table below to presentyour findings:
| Actual | Flexible budget | Budget Variance | Price Variance | Quantity Variance |
DM | 429000 | 360000 | 69000 U (429000-360000) | 39000 U | 30000 U |
- Calculate the labor rate variance and labor efficiencyvariance. Enter your calculations into the table below to presentyour findings:
| Actual | Flexible budget | Budget Variance | Rate Variance | Efficiency Variance |
DL | 637000 | 600000 | 37000 U (637000-60000) | 13000 F | 50000 U |
- Calculate the variable overhead spending variance and variableoverhead efficiency variance. Enter your calculations into thetable below to present your findings:
| Actual | Flexible budget | Budget Variance | Spend Variance | Efficiency Variance |
VOH | 231000 | 240000 | 9000 F (231000-24000) | 29000 F | 20000 U |
- Company policy is to investigate all variances greaterthan 10 percent of the flexible budget amount for each of the threevariable production costs: direct materials, direct labor, andvariable overhead. Identify which of the six variances calculatedin requirements bthrough eshould be investigated.
- Provide two possible explanations for each varianceidentified in requirement e.
