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Pro Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 142,000 square feet of extruded vinyl purchased at $1.35 per square foot. Production required 410 direct labor hours that cost $15.50 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.40 per square foot. The labor standard was 0.023 direct labor hour per fender, at a standard cost of $14.50 per hour. Read the requirement. 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 = Direct labor cost variance 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 = Direct labor efficiency variance Does the pattern of variances suggest Pro Fender's managers have been making trade-offs? Explain. The v direct materials cost variance combined with the V direct materials efficiency variance suggests that managers may have used V direct materials. The net effect on the total direct materials variance is The V direct labor cost variance combined with the V direct labor efficiency variance suggests that managers may have used V workers who performed more efficiently. The net effect on the total direct labor variance is

Pro Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 142,000 square feet of extruded vinyl purchased at $1.35 per square foot. Production required 410 direct labor hours that cost $15.50 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.40 per square foot. The labor standard was 0.023 direct labor hour per fender, at a standard cost of $14.50 per hour. Read the requirement. 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 = Direct labor cost variance 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 = Direct labor efficiency variance Does the pattern of variances suggest Pro Fender's managers have been making trade-offs? Explain. The v direct materials cost variance combined with the V direct materials efficiency variance suggests that managers may have used V direct materials. The net effect on the total direct materials variance is The V direct labor cost variance combined with the V direct labor efficiency variance suggests that managers may have used V workers who performed more efficiently. The net effect on the total direct labor variance is

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 6PA: Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin...
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Pro Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 142,000 square feet of extruded vinyl purchased at $1.35 per square foot. Production required 410 direct labor hours that cost $15.50 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.40 per square foot. The labor standard was 0.023 direct labor hour per fender, at a standard cost of $14.50 per hour. Read the requirement. 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 %3D Direct labor cost variance 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 %D %3D Direct labor efficiency variance Does the pattern of variances suggest Pro Fender's managers have been making trade-offs? Explain. The direct materials cost variance combined with the direct materials efficiency variance suggests that managers may have used direct materials. The net effect on the total direct materials variance is The direct labor cost variance combined with the direct labor efficiency variance suggests that managers may have used workers who performed more efficiently. The net effect on the total direct labor variance is
Transcribed Image Text:Pro Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 142,000 square feet of extruded vinyl purchased at $1.35 per square foot. Production required 410 direct labor hours that cost $15.50 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.40 per square foot. The labor standard was 0.023 direct labor hour per fender, at a standard cost of $14.50 per hour. Read the requirement. 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 %3D Direct labor cost variance 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 %D %3D Direct labor efficiency variance Does the pattern of variances suggest Pro Fender's managers have been making trade-offs? Explain. The direct materials cost variance combined with the direct materials efficiency variance suggests that managers may have used direct materials. The net effect on the total direct materials variance is The direct labor cost variance combined with the direct labor efficiency variance suggests that managers may have used workers who performed more efficiently. The net effect on the total direct labor variance is
Formula (AC - SC) x AQ pute (AC - SC) x SQ erials (AQ - SQ) x AC (AQ - SQ) x SC Actual FOH - Allocated FOH Actual FOH - Budgeted FOH Bugeted FOH - Allocated FOH ges... ..uking IL ||
Transcribed Image Text:Formula (AC - SC) x AQ pute (AC - SC) x SQ erials (AQ - SQ) x AC (AQ - SQ) x SC Actual FOH - Allocated FOH Actual FOH - Budgeted FOH Bugeted FOH - Allocated FOH ges... ..uking IL ||
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