Warrier Gear manufactures clothing. A flannel shirt requires thefollowing:Standard Direct Materials 2 square yards...Warrier...

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Warrier Gear manufactures clothing. A flannel shirt requires thefollowing:
Standard Direct Materials 2 square yards at $15 per yard
Standard Manufacturing Labor 1.5 hours at $25 per hour
During the third quarter, the company made 1,500 shirts and used3,200 square yards of fabric costing $44,800. Direct labor totaled2,100 hours for $56,700.
Required:
(A) Compute the direct materials price and efficiencyvariances for the quarter. Show all computations.
(B) Compute the direct manufacturing labor price andefficiency variances for the quarter. Show allcomputations.
(C) Describe 2 possible reasons for each of thefollowing variances direct materials price variance, directmaterials efficiency variance, direct manufacturing labor pricevariance, and direct manufacturing efficiencyvariance.

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3.6 Ratings (535 Votes)


				A		B
Standard Cost:	Qty	Rate	PU	Direct Material:		Direct Labor:
Direct Material	2.00	15.00	30.00	Price Variance:		Rate Variance:
Direct Labor	1.50	25.00	37.50	(Standard Price-Actual Price)* Actual Qty		(Standard Price-Actual Price)* Actual Hour
				(15-14)3200		(25-27)*2100
Actual Production	1,500			3200	Favourable	-4200	Unfavourable
For Actuals:
Standard Cost:	Qty	Rate	PU	Direct Material:		Direct Labor:
Direct Material	3,000	15.00	45,000	Eff Variance:		Eff Variance:
Direct Labor	2,250	25.00	56,250	(Standard Qty-Actual Qty)* SP		(Standard H-Actual H)* SP
				(3000-3200)*15		(2250-2100)*25
For Actuals:				-3000	Unfavourable	3750	Favourable
Actual Cost	Qty	Rate	PU
Direct Material	3,200	14.00	44,800
Direct Labor	2,100	27.00	56,700	C
				Direct Material Price Variance:	Market Value of Raw Material might have declined

				Direct Material Efficency Variance:	Low Quality Material
					Poor Usage by Production Team
				Direct Labor Rate Variance:	Labor Strike led to shortage of Labor
					Minimum Wages might have increased
				Direct Labor Eff Variance:	Standard working style might have increased

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In: AccountingWarrier Gear manufactures clothing. A flannel shirt requires thefollowing:Standard Direct Materials 2 square yards...Warrier Gear manufactures clothing. A flannel shirt requires thefollowing:Standard Direct Materials 2 square yards at $15 per yardStandard Manufacturing Labor 1.5 hours at $25 per hourDuring the third quarter, the company made 1,500 shirts and used3,200 square yards of fabric costing $44,800. Direct labor totaled2,100 hours for $56,700.Required:(A) Compute the direct materials price and efficiencyvariances for the quarter. Show all computations.(B) Compute the direct manufacturing labor price andefficiency variances for the quarter. Show allcomputations.(C) Describe 2 possible reasons for each of thefollowing variances direct materials price variance, directmaterials efficiency variance, direct manufacturing labor pricevariance, and direct manufacturing efficiencyvariance.