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StormLrd StormLrd
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4 years ago
Littrell Company produces chairs and has determined the following direct cost categories and budgeted amounts:
         Standard Inputs   Standard Cost
      Category   for 1 output   per input
   Direct Materials   1.00      $7.50
   Direct Labour   0.30       9.00
   Direct Marketing   0.50      3.00

Actual performance for the company is shown below:

   Actual output: (in units)   4,000
   Direct Materials:
         Materials costs    $30,225
         Input purchased and used    3,900
         Actual price per input    $7.75
   Direct Manufacturing Labour:
         Labour costs    $11,470
         Labour-hours of input    1,240
         Actual price per hour    $9.25
   Direct Marketing Labour:
         Labour costs   $5,880
         Labour-hours of input   2,100
         Actual price per hour   $2.80

Required:
a.   What is the combined total of the flexible-budget variances?
b.   What is the rate variance of the direct materials?
c.   What is the rate variance of the direct manufacturing labour and the direct marketing labour, respectively?
d.   What is the efficiency variance for direct materials?
e.   What are the efficiency variances for direct manufacturing labour and direct marketing labour, respectively?
Textbook 

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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pachopacho
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4 years ago
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More questions for this book are available here
a.
   Actual Result       Flexible Budget   Variances
Direct materials   $30,225   $30,000   $225   U
Direct manufacturing labour    11,470   10,800   670    U
Direct marketing labour   5,880   6,000    120    F
   $47,575   $46,800   $775    U

b.   ($7.75 - $7.50) × (3,900) = $975 unfavourable

c.    Manufacturing Labour ($9.25 - $9.00) × 1,240 = $310 unfavourable
   Marketing Labour ($2.80 - $3.00) × 2,100 = $420 favourable

d.   [3,900 - (4,000 units × 1.00)] × $7.50 = $750 favourable

e.   Manufacturing Labour = [1,240 hours - (4,000 × 0.30 hours)] × $9.00 = $360 U
   Marketing Labour = [2,100 hours - (4,000 × 0.50 hours)] × $3.00 = $300.00 U
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