Question

# Bowie Sporting Goods manufactures sleeping bags. The manufacturing standards per sleeping bag, based on 5,000 sleeping...

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 5.00 yards at \$5.50 per yard Direct labor of 3.00 hours at \$16.00 per hour Overhead applied per sleeping bag at \$18.00 In the month of April, the company actually produced 4,900 sleeping bags using 25,700 yards of material at a cost of \$6.10 per yard. The labor used was 11,500 hours at an average rate of \$20.50 per hour. The actual overhead spending was \$96,200. Determine the materials price variance and round to the nearest whole dollar. Enter a favorable variance as a negative number. Enter an unfavorable variance as a positive number.

 Solution: Material price variance \$15,420 Working Notes: Material price variance '= (Actual price per Yard - Standard price per yard) x Actual yards of material used =(\$6.10 - \$5.50) x 25,700 =\$0.60 x 25,700 =\$15,420 =\$15,420    Unfavorable Since, material price variance is positive it means actual price paid is more than standard price & that is Unfavorable for the company. Please feel free to ask if anything about above solution in comment section of the question.