80.2K

Verified Solution

Link Copied!

Variance Computations and Explanations Outdoor Company manufactures camping tents from lightweight synthetic fabric. Each tent has a standard materials cost of $20, consisting of 4 yards of fabric at $5 per yard. The standards call for 2 hours of assembly at $15 per hour. The following data were recorded for October, the first month of operations:

Fabric purchased	11,000 yards $4.80 per yard
The fabric used in the production of 1,900 tents	8,000 yards
Direct labor used	4,100 hours $15.50 per hour

(a) Compute all standard cost variances for materials and labor.

Materials price variance (usage basis)	Answer	answer
Materials price variance (purchase basis)	Answer	answer
Materials quantity variance	Answer	answer
Labor rate variance	Answer	answer
Labor efficiency variance	Answer	answer

(b) Which of the following is the most likely explanation for a favorable materials price variance and an unfavorable materials quantity variance?

Purchase of low-quality materials.

Last-minute purchases of raw materials from a trusted supplier to meet unexpected demand for final products.

Bargain purchases of high-quality materials.

Quantity discounts and the use of highly skilled production employees.

(c) Determine the standard variable cost of the 1,900 tents produced, separated into direct materials and labor.

Direct materials	Answer
Direct labor	Answer
Total standard variable cost	Answer

Answer & Explanation Solved by verified expert

See Answer