DeluxeFender, which uses a standard cost system, manufactured20,000boat fenders during2024,using144,000square feet of extruded vinyl purchased at$1.50per square foot. Production required440direct labor hours that cost$13.50per hour. The direct materials standard wassevensquare feet of vinyl per fender, at a standard cost of$1.55per square foot. The labor standard was0.025direct labor hour per fender, at a standard cost of$12.50per hour. Read therequirement1. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U).(Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula VarianceDirect materials cost variance=(AC - SC) × AQ=$7,200FDirect labor cost variance=(AC - SC) × AQ=$440USelect the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U).(Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula VarianceDirect materials efficiency variance=(1) (AQ - SQ) × SC= (2) UDirect labor efficiency variance=(3) (AQ - SQ) × SC= (4) FDoes the pattern of variances suggestDeluxeFender's managers have been making trade-offs? Explain. The(5) direct materials cost variance combined with the(6) direct materials efficiency variance suggests that managers may have used(7) direct materials. The net effect on the total direct materials variance is(8) .The(9) direct labor cost variance combined with the(10) direct labor efficiency variance suggests that managers may have used(11) workers who performed more efficiently. The net effect on the total direct labor variance is(12) .1: RequirementCompute the cost and efficiency variances for direct materials and direct labor. Does the pattern of variances suggestDeluxeFender's managers have been making trade-offs? Explain.(1) (AC - SC) × AQ (AC - SC) × SQ (AQ - SQ) × AC (AQ - SQ) × SC Actual FOH - Allocated FOH Actual FOH - Budgeted FOH Bugeted FOH - Allocated FOH(2) F U(3) (AC - SC) × AQ (AC - SC) × SQ (AQ - SQ) × AC (AQ - SQ) × SC Actual FOH - Allocated FOH Actual FOH - Budgeted FOH Bugeted FOH - Allocated FOH(4) F U(5) favorable unfavorable(6) favorable unfavorable(7) higher-quality lower-quality(8) favorable unfavorable(9) favorable unfavorable(10) favorable unfavorable(11) more skilled (higher-paid) lesser skilled (lower-paid)(12) favorable unfavorable

Name: DeluxeFender, which uses a standard cost system, manufactured20,000b
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Description: DeluxeFender, which uses a standard cost system, manufactured20,000boat fenders during2024,using144,000square feet of extruded vinyl purchased at$1.50per square foot. Production required440direct labor hours that cost$13.50per hour. The direct mat

One of two variances used to monitor direct materials is the direct material cost variance. The…

Answered: Deluxe Fender, which uses a standard…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Deluxe

Fender, which uses a standard cost system, manufactured

20,000

boat fenders during

2024,

using

144,000

square feet of extruded vinyl purchased at

$1.50

per square foot. Production required

440

direct labor hours that cost

$13.50

per hour. The direct materials standard was

seven

square feet of vinyl per fender, at a standard cost of

$1.55

per square foot. The labor standard was

0.025

direct labor hour per fender, at a standard cost of

$12.50

per hour.

Read the

requirement1.

Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U).(Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.)

		Formula		Variance
Direct materials cost variance	=	(AC - SC) × AQ	=	$7,200	F
Direct labor cost variance	=	(AC - SC) × AQ	=	$440	U

Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U).(Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.)

		Formula		Variance
Direct materials efficiency variance	=	(1) (AQ - SQ) × SC	=		(2) U
Direct labor efficiency variance	=	(3) (AQ - SQ) × SC	=		(4) F

Does the pattern of variances suggest

Deluxe

Fender's managers have been making trade-offs? Explain.

The

(5)

direct materials cost variance combined with the

(6)

direct materials efficiency variance suggests that managers may have used

(7)

direct materials. The net effect on the total direct materials variance is

(8)

The

(9)

direct labor cost variance combined with the

(10)

direct labor efficiency variance suggests that managers may have used

(11)

workers who performed more efficiently. The net effect on the total direct labor variance is

(12)

1: Requirement

Compute the cost and efficiency variances for direct materials and direct labor. Does the pattern of variances suggest

Deluxe

Fender's managers have been making trade-offs? Explain.

(1)

(AC - SC) × AQ

(AC - SC) × SQ

(AQ - SQ) × AC

(AQ - SQ) × SC

Actual FOH - Allocated FOH

Actual FOH - Budgeted FOH

Bugeted FOH - Allocated FOH

(2)

(3)

(AC - SC) × AQ

(AC - SC) × SQ

(AQ - SQ) × AC

(AQ - SQ) × SC

Actual FOH - Allocated FOH

Actual FOH - Budgeted FOH

Bugeted FOH - Allocated FOH

(4)

(5)

favorable

unfavorable

(6)

favorable

unfavorable

(7)

higher-quality

lower-quality

(8)

favorable

unfavorable

(9)

favorable

unfavorable

(10)

favorable

unfavorable

(11)

more skilled (higher-paid)

lesser skilled (lower-paid)

(12)

favorable

unfavorable

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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Deluxe ​Fender, which uses a standard cost​ system, manufactured 20,000 boat fenders during 2024​, using 144,000 square feet of extruded vinyl purchased at $1.50 per square foot. Production required 440

Deluxe Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2024, using 144,000 square feet of extruded vinyl purchased at $1.50 per square foot. Production required 440