Question

During May, Joliet Fabrics Corporation manufactured 680 units of a special multilayer fabric with the trade...

During May, Joliet Fabrics Corporation manufactured 680 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May.

Direct material purchased: 19,800 yards at $1.56 per yard $ 30,888
Direct material used: 11,300 yards at $1.56 per yard 17,628
Direct labor: 3,900 hours at $9.33 per hour 36,387


The standard prime costs for one unit of Stylex are as follows:

Direct material: 20 yards at $1.53 per yard $ 30.60
Direct labor: 5 hours at $8.00 per hour 40.00
Total standard prime cost per unit of output $ 70.60

Required:

Compute the following variances for the month of May. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).

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Answer #1
Joliet Fabrics Corporation
Standard Data
Rate Per Yard
Direct Material 20 Yards 1.53
Material Purchases 19800 Yards
Actual Material used 11300
Material Price 1.56 Per Yard
Manufacturing units 680
Direct Material Quantity Variance=AQ*SP-SQ*SP
AQ= 11300
SQ=(Actual Units Produced*Standard quantity required per unit)=680*20 13600
SP= $                           1.53
Direct Material Quantity Variance=$1.53*(11300-13600) $                 -3,519.00 (F)
Material Price Variance=AQ*AP-AQ*SP
AQ= 19800
AP= $                           1.56
SP= $                           1.53
Material Price Variance=19800*($1.56-$1.53) $                      594.00 (U)
Standard
Direct Labor 5 Hours 8
Actual labor cost per hour $                           9.33
Actual labor hours 3900
Actual Production 680
Direct Labor Rate Variance=AH*AR-AH*SR
AH= 3900
AR= $                           9.33
SR= $                           8.00
Direct Labor Rate Variance=3900*(9.33-8) $                   5,187.00 (U)
Direct Labor Efficiency Variance=AH*SR-SH*SR
Ah= 3900
SR= $                           8.00
SH=Actual units produced*Standard Hours required per unit=(680*5) 3400
Direct Labor Efficiency Variance=$8*(3900-3400) $                   4,000.00 (U)
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