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 5.50 yards at $5.50 per yard

Direct labor of 2.00 hours at $16.00 per hour

Overhead applied per sleeping bag at $18.00

In the month of April, the company actually produced 5,200 sleeping bags using 27,300 yards of material at a cost of $5.50 per yard. The labor used was 11,700 hours at an average rate of $18.50 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.

Answer 1

Formula for total material variance is

(Standard quantity for actual output *Standard price) - (Actual quantity * Actual Price)

Standard quantity per bag is 5.5 yard

Actual output 5200 bags.

So standard quantity for actual output = 5200 bags * 5.5 yard per bag = 28600 yards

Actual yards of material used = 27300

Standard price =$5.5 per yard

Actual price per yard = $5.5 per yard.

So total material variance = (28600 *$5.5) - (27300*$5.5) = - $7150

As the actual quantity used is less than standard, variance is favourable i.e. - $7150