Question

What is the total​ flexible-budget variance for both inputs​ (direct materials and direct manufacturing​labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible​ budget?NancyLou​, ​Inc., designs and manufactures​ T-shirts. It sells its​ T-shirts to​ brand-name clothes retailers in lots of one dozen. NancyLou's May 2012 static budget and actual results for direct inputs are as​ follows: Static Budget Number of T-shirt lots (1 lot = 1 dozen) 450 Per Lot of T-shirts Direct materials 15 meters at $1.70 per meter = $25.50 Direct manufacturing labor 2.3 hours at $7.90 per hour = $18.17 Actual Results Number of T-shirt lots sold 500 Total Direct Inputs Direct materials 8,100 meters at $1.95 per meter = $15,795.00 Direct manufacturing labor 1,100 hours at $8.00 per hour = $8,800.00 NancyLou has a policy of analyzing all input variances when they add up to more than​ 10% of the total cost of materials and labor in the flexible​ budget, and this is true in May 20122012. The production manager discusses the sources of the​ variances: "A new type of material was purchased in May. This led to faster cutting and​ sewing, but the workers used more material than usual as they learned to work with it. For​ now, the standards are​ fine."

Calculate the direct materials and direct manufacturing labor price and efficiency variances in May

2012

Answer 1

	in $
Ans 1 Flexible Budget variance
(3045-285)	2760	U
Direct Material
Actual-Flexible Budget
15795-(500*15*1.7)	3045	U
Direct Labor	285	F
8800-(500*2.3*7.9)	-285
answer 2
% in flexible budget of variance	12.64	%
2760/((500*15*1.7)+(500*2.3*7.9))*100
	in $
Direct material price variance	2025	U
AQ*(AP-SP)
8100*(1.95-1.7)
Direct Material Efficiency variance	1020	U
SP*(AQ-SQ allowed)
1.7*(8100-(500*15))
Direct Labor rate variance	110	U
AH*(AR-SR)
1100*(8-7.9)
Direct labor efficiency	395	F
SR*(AH-SH allowed)	-395
7.9*(1100-(500*2.3))
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