Question

Bowie Sporting Goods manufactures sleeping bags. The manufacturing standards per sleeping bag, based on 5,000 sleeping bags per month, are as follows: Direct material of 6.00 yards at $5.00 per yard Direct labor of 3.00 hours at $20.00 per hour Overhead applied per sleeping bag at $17.00 In the month of April, the company actually produced 5,200 sleeping bags using 27,300 yards of material at a cost of $5.70 per yard. The labor used was 11,700 hours at an average rate of $17.50 per hour. The actual overhead spending was $96,200. Determine the total materials variance and round to the nearest whole dollar. Enter a favorable variance as a negative number. Enter an unfavorable variance as a positive number.

Bowie Sporting Goods manufactures sleeping bags. The manufacturing standards per sleeping bag, based on 5,000 sleeping bags per month, are as follows:

Direct material of 4.00 yards at $5.00 per yard

Direct labor of 2.50 hours at $18.00 per hour

Overhead applied per sleeping bag at $19.00

In the month of April, the company actually produced 5,200 sleeping bags using 27,300 yards of material at a cost of $5.30 per yard. The labor used was 11,700 hours at an average rate of $16.50 per hour. The actual overhead spending was $96,200.

Determine the labor rate variance and round to the nearest whole dollar. Enter a favorable variance as a negative number. Enter an unfavorable variance as a positive number.

Answer 1

Solution 1 .

Calculation of Total Material Variance :

Total Material Variance = Actual Material Cost -Standard Material Cost

Here ,

Standard Material Cost = Standard Qty * Standard Rate

= (5000 bags * 6 yards) *($5 per yard)

=30,000 * $5

= $150,000

Actual Material Cost = Actual Qty * Actual Rate

= (27,300 Yard) *($5.70 per yard)

=$155,610

Therefore,

Total Material Variance = $155,610 - $150,000

= 5,610 (Unfavorable)

Solution 2.

Calculation of Labor Rate Variance:

Labor Rate Variance = ( Actual Rate - Standard Rate) * Actual Hours Worked

Here,

Actual Rate = $16.5 per Hr

Standard Rate = $18.0 per hr

Actual Hours = 11,700 Hrs

Labor Rate Variance = ( $16.5 - $18.0) * 11,700 Hr

= -$1.5 * 11,700 Hr

= - $17,550 (Favorable)