Question

Standards and Variance Analysis.

Retro Wear manufactures dresses in a small facility in Canton, New York. Information about the production week is as follows:

Standard wage per hour $11.90

Standard labor time per dress                           12 minutes

Standard number of yards of fabric per dress 3.7 yards

Standard price per yard of fabric $2.85

Actual price per yard of fabric   $2.75

Actual yards of fabric used this week              12,000 yards

Number of dresses made this week                 3,250

Actual wage per hour                                       $11.00

Actual hours worked this week 690 hours

Required:

A) Determine the total DIRECT MATERIALS cost variance, B) the DM price variance, C) and the DM quantity variance. For full credit, show your work and indicate Favorable or Unfavorable along with your variance amount.

Answer 1

direct material cost variance = (standard quantity *standard price - actual quantity * actual price )
		= (3250*3.7*2.85)-(12000*2.75)
		= 34271.25-33000
		= $1271.25(F)
Direct material price variance = (standard price - actual price ) x actual quantity
		= (2.85-2.75)*12000
		= 1200(F)
Direct material quantity variance = (standard quntity - actual quantity ) x standard price
			= (3250*3.7 - 12000) 2.85
			= 71.25(F)