Great Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2024, using...
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Great Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2024, using 144,000 square feet of extruded vinyl purchased at $1.40 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 $1.45 per square foot. The labor standard was 0.024 direct labor hour per fender, at a standard cost of $12.50 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 = = Requirement - x Compute the cost and efficiency variances for direct materials and direct labor. Does the pattern of variances suggest Great Fender's managers have been making trade-offs? Explain. Print Done
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