Question

​pro Fender, which uses a standard cost​ system, manufactured 20000 boat fenders during 2024​, using 142000 square feet of extruded vinyl purchased at $1.45 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 $1.50 per square foot. The labor standard was 0.025 direct labor hour per​ fender, at a standard cost of $12.50 per hour.

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.)

Answer 1

Calculate cost variance for direct materials
Direct material costs variance	(AC - SC)*AQ
Direct material costs variance	(1.45 - 1.50)*142,000
Direct material costs variance	7,100 F
Thus, direct material cost variance is $7,100 F
Calculate cost variance for direct labour
Direct labour costs variance	(AC - SC)*AQ
Direct labour costs variance	(13.5 - 12.50)*440
Direct labour costs variance	440 U
Thus, direct labour cost variance is $440 U