FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Flexible Budgeting and Variance Analysis

I'm Really Cold Coat Company makes women's and men's coats. Both products require filler and lining material. The following planning information has been made available:

Standard Amount per Unit
       Women’s Coats      Men’s Coats      Standard Price per Unit
Filler 4.0 lbs.   5.20 lbs.   $2.00 per lb.  
Liner 7.00 yds.   9.40 yds.   8.00 per yd.  
Standard labor time 0.40 hr.   0.50 hr.      

 

  Women’s Coats Men’s Coats
Planned production 5,000 units   6,200 units  
Standard labor rate $14.00 per hr.   $13.00 per hr.  

I'm Really Cold Coat Company does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, I'm Really Cold Coat Company experienced the following actual results:

  Women’s Coats Men’s Coats
Actual production 4,400 5,800
       Actual Price per Unit      Actual Quantity Purchased and Used
Filler $1.90 per lb.   48,000  
Liner 8.20 per yd.   85,100  
  Actual Labor Rate      Actual Labor Hours Used
Women's coats $14.10 per hr.   1,825  
Men's coats 13.30 per hr.   2,800  

The expected beginning inventory and desired ending inventory were realized.

Required:

1.  Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year:

     a. Direct materials price variance, direct materials quantity variance, and total variance.

     b. Direct labor rate variance, direct labor time variance, and total variance.

Round your answers to two decimal places, if necessary. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

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