1. Calculate the total direct materials variance and total direct labour variance, together with their respective sub-variances.2. Show how he derived the percentages quoted in his statement Grainger Ltd makes sofa covers which are sold directly to the public via the company's website.The business has expanded over the last couple of years and has recently appointed you asmanagement accountant to replace Mark Arthurs, the retiring office manager. To help you on yourarrival, Mark Arthurs has supplied the following standard costing data, based on observations andfinancial records.Quantity of resourceCost per unit ofresource (£)Standard costper unit (£)Direct materials2028014 m² (square metres)10 hoursDirect Labour11.50115Total395Planned output for October (your first month in the post) had been 2,300 units, however, due tothe current trend for refurbishing existing furniture rather than replacing it, the actual output in themonth was 2,622 units. The month had, however, been challenging, with staff shortages beingplugged using agency staff and fabric is difficult to source due to supply chain issues.The report of actual costs incurred in October is as follows:Quantity of resourceTotal Cost (£)Direct materials38,019 m² (square metres)798,399Direct Labour31,464 hours373,635Total1,172,034In a meeting to discuss cost control in the period, Stuart Brown, the production manager, made thefollowing statement: "in preparing for this meeting I've done some calculations: output was 14%higher than planned but our cost per unit was only 13.2% higher than standard: what a fantasticjob the team's done in controlling our costs!"a)Calculate the total direct materials variance and total direct labour variance, togetherwith their respective sub-variances.b)Show how Stuart derived the percentages quoted in his statement and consider itsvalidity. Discuss whether or not you agree that costs have been well controlled in theperiod.

Name: 1. Calculate the total direct materials variance and total direct labo
Uploaded: 2024-03-20T06:33:06.000Z
Channel: Bartleby
Description: 1. Calculate the total direct materials variance and total direct labour variance, together with their respective sub-variances.2. Show how he derived the percentages quoted in his statement Grainger Ltd makes sofa covers which are sold directly to t

Answered: Image /qna-images/answer/f67af50a-27b5-4c97-b3b2-2e8473d20ada.jpg

Answered: 1. Calculate the total direct materials…

Business

Accounting

1. Calculate the total direct materials variance and total direct labour variance, together with their respective sub-variances. 2. Show how he derived the percentages quoted in his statement

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The management of Al Safa Production LLC requested you to identify from the following how direct…

A: Standard costing means where standard is set for various cost element and actual cost is then…

Q: A company using direct costing in its performance evaluation would normally include the following…

A: Direct costing refers to the concept of evaluating the cost or expenses by only considering the…

Q: The material price variance is computed by multiplying the difference between the actual price and…

A: GIVEN Material Price Variance is the difference between the actual cost of Material purchased and…

Q: nesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The…

A: Solution: Variances are the differences in actual results and standard set for those actual results.…

Q: Sheridan Corporation accumulates the following data relative to jobs started and finished during the…

A: Variance analysis is quantitive method of getting compression between actual and standard cost. It…

Q: Crritically identify the possible causes of the labour and material variances

A: Labor variances in a business refer to the differences between the expected or budgeted labor costs…

Q: Under the 3 variance method for analyzing overhead, the difference between the actual factory…

A: Under the 3 variance method for analyzing overhead, the difference between the actual factory…

Q: t variances. Select the required formulas, compute the cost variances for direct materials and…

A: Variiances ariise when the actual results differs from standard or budgeted results. There are…

Q: please answers these three fallowing questions: B-1. What is the labor efficiency variance? Note:…

A: Variance is the difference in the value of budgeted quantity. and the actual cost\quantity. Direct…

Q: Required: a. Determine the standard cost per faucet for direct materials and direct labor. Round the…

A: Formula: 1.Material Quantity Variance= [(Standard Quantity-Actual Quantity)*Standard Cost]…

Q: Data table Sales Variable Manufacturing Direct Materials Direct Labor (1,025 recliners x $500 each)…

A: A budget is a forecast of revenue and expenses for a certain future period of time that is generally…

Q: Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency…

A: The variance is the difference between the standard data and actual production data for the period.

Q: Labor rate variance is calculated as: Difference of standard hours and actual hours multiplied by…

A: Labor rate variance is a measure used in cost accounting to quantify the difference between the…

Q: The materials price variance should be computed when materials are purchased. Group of answer…

A: Variance: The difference between the actual cost or price and the budgeted (standard) cost or price…

Q: How you differentiate and operate the skilled labour and unskilled labour while calculating the…

A: Unskilled labor simply refers to workers who lack technical training and expertise. Unskilled labor…

Q: volume

A: The material total variance is the sum of material price variance and material quantity variance.…

Q: Computing and journalizing standard cost variances McKnight manufactures coffee mugs that it sells…

A: Direct material Cost variance = Actual quantity ( Actual cost - standard cost ) Direct labor cost…

Q: Trini Company set the following standard costs per unit for its single product Direct materials (30…

A: Direct material variance refers to the concept of determining the gap between the estimated quantity…

Q: Need Help with this Question

A: Problem 1: Calculating the Factory Overhead RateTo determine the factory overhead rate using the…

Q: The standards for direct materials are made up of which of the following components? a.variance…

A: The question is multiple choice question. Required Choose the Correct Option.

Q: 1. How is the flexible budget used within the variance analysis system to evaluate effectiveness and…

A: 1) Flexible budget refers to a budget that flexes with change in volume or change in activity. It is…

Q: Outline 2 potential causes for each of the material and labour variances

A: The distinction between the standard cost of direct materials indicated for fabricating and the real…

Q: Answer with this question

A: Step 1: Introduction to the Total Asset turnover:Total asset turnover is given as the sales divided…

Q: List the direct labor variances, and briefly describe each.

A: Labor variance arises when the actual expenses associated with a labor activity varies from the…

Q: Determine a detailed list of possible causes of any material, labour or fixed overhead cost…

A: For any manufacturing industry It is important to set standards for the various activities like…

Q: please solve for these questions: b-1. What is the labor efficiency variance? b-2. What is the…

A: Variance analysis is a method of measuring the difference between the standard numbers expected by…

Q: From the following particulars, calculate the following material variances and give their…

A: Solution:- a)Calculation of Material Cost variance as follows under:- It is difference between the…

Q: hich of the following factor may not be included in the computation of the total materials variance?…

A: Formula Total Material variance = (Standard cost of material allowed for actual output) – (Actual…

Q: Under the three-variance method for analyzing factory overhead, whi.ch of the following is used in…

A: A three way variance has Efficiency, volume and spending variance. Generally variance refers to the…

Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

Topic Video

Question

1. Calculate the total direct materials variance and total direct labour variance, together with their respective sub-variances.

2. Show how he derived the percentages quoted in his statement

Grainger Ltd makes sofa covers which are sold directly to the public via the company's website.
The business has expanded over the last couple of years and has recently appointed you as
management accountant to replace Mark Arthurs, the retiring office manager. To help you on your
arrival, Mark Arthurs has supplied the following standard costing data, based on observations and
financial records.
Quantity of resource
Cost per unit of
resource (£)
Standard cost
per unit (£)
Direct materials
20
280
14 m² (square metres)
10 hours
Direct Labour
11.50
115
Total
395
Planned output for October (your first month in the post) had been 2,300 units, however, due to
the current trend for refurbishing existing furniture rather than replacing it, the actual output in the
month was 2,622 units. The month had, however, been challenging, with staff shortages being
plugged using agency staff and fabric is difficult to source due to supply chain issues.
The report of actual costs incurred in October is as follows:
Quantity of resource
Total Cost (£)
Direct materials
38,019 m² (square metres)
798,399
Direct Labour
31,464 hours
373,635
Total
1,172,034
In a meeting to discuss cost control in the period, Stuart Brown, the production manager, made the
following statement: "in preparing for this meeting I've done some calculations: output was 14%
higher than planned but our cost per unit was only 13.2% higher than standard: what a fantastic
job the team's done in controlling our costs!"
a)
Calculate the total direct materials variance and total direct labour variance, together
with their respective sub-variances.
b)
Show how Stuart derived the percentages quoted in his statement and consider its
validity. Discuss whether or not you agree that costs have been well controlled in the
period.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Calculation of Variances

VIEW

Step 2 Explanation

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

When analyzing an organization's budget using 2-variance analysis, the 2 elements used are volume variance and: Select one: a. quantity variance b. price variance c. applied variance O d. budget variance
Which one of the following is the variance that deals with under or over achievement of budgeted direct labour hours? A. Direct labour usage variance B. Direct labour time variance C. Direct labour efficiency variance D. Direct labour rate variance
Give an example of a Direct Material Price Variance with figures and calculate the variance
Trini Company set the following standard costs per unit for its single product Direct materials (30 pounds @ $4.40 per pound) Direct labor (6 hours @ $14 per hour) Variable overhead (6 hours @ $8 per hour) Fixed overhead (6 hours @ $11 per hour) $ 132.00 84.00 48.00 66.00 $ 330.00 Standard cost per unit Overhead is applied using direct labor hours. The standard overhead rate is based on a predicted activity level of 80% of the company's capacity of 50,000 units per quarter. The following additional information is available. Production (in units) Standard direct labor hours (6 DLH per unit) Budgeted overhead (flexible budget) Fixed overhead Variable overhead Operating Levels 70% 80% 90% 35,000 210,000 40,000 240,000 45,000 270,000 $ 2,640,000 $ 1,680,000 $ 2,640,000 $ 2,640,000 $ 1,920,000 $ 2,160,000 During the current quarter, the company operated at 90% of capacity and produced 45,000 units; actual direct labor totaled 266,000 hours. Units produced were assigned the following…
pls answer the questions
The rate variance and total direct labor cost variance were not correct, please re do those calculations.
A company using direct costing in its performance evaluation would normally include the following variance in its report, except Price variance Volume variance Efficiency variance Budget variance
Explain how the two-, three-, and four-variance overhead analyses are related.
Which of the following is a correct equation to calculate the fixed overhead production-volume variance? a. budgeted fixed overhead costs − fixed overhead costs allocated for actual output b. static budget amount − flexible budget amount c. actual costs incurred − fixed overhead costs allocated for actual output d. flexible budget amount − actual costs incurred
Here are the questions from my study material. Question included in the attached image. _________________ What were the price and quantity variances for direct material, respectively? What were the rate and efficiency variances for direct labour, respectively?
Explain the phrase, "Fixed Overhead Expenditure (or Spending or Budget)Variance: This variance shows the difference between the budgetedfixed overheads and the actual fixed overheads incurred during a particularperiod."
The direct labor rate variance is calculated by multiplying the standard hours that should have been worked for the actual output by the difference between the standard labor rate and the actual labor rate. O True O False