Ch12-week 11 tutorial questions and solutions.docx - 12.27 Materials and manufacturing labour variances Consider the following data collected for

# Ch12-week 11 tutorial questions and solutions.docx - 12.27...

• Homework Help
• 5

This preview shows page 1 - 3 out of 5 pages.

12.27 Materials and manufacturing labour variances Consider the following data collected for Tents‘n’Stuff Pty Ltd: Direct Direct manufacturing materials labour Cost incurred: actual inputs × actual prices \$200 000 \$90 000 Actual inputs × standard prices 214 000 86 000 Standard inputs allowed for actual output × standard prices 225 000 80 000 Required Calculate the price and efficiency variances for direct materials and direct manufacturing labour. Solution: Material price variance=(actual price-standard price)*Actual quantity purchased = actual price*actual quantity purchased-standard price*actual quantity purchased = 200,000-214,000=14,000 F Material efficiency variance= (actual quantity used-standard quantity allowed per unit*actual output)*standard price =214,000-225,000=11,000 F Labour price variance=(actual rate –standard rate)*actual hours =actual rate*actual hours-standard rate*actual hours =90,000-86,000=4,000 U Labour efficiency variance=(actual hours-standard hours allowed per unit*actual output)*standard rate =86,000-80,000=6,000 U 12.28 Direct materials and direct manufacturing labour Maroochy Pty Ltd designs and manufactures wetsuits. It sells its wetsuits to brand-name retailers. Maroochy’s May 2018 static budget and actual results for direct inputs are: Static budget (standards) Number of wetsuits 950 Per wetsuit Direct materials 2.25 metres at \$17.50 per metre = \$39.375 Direct manufacturing labour 1.25 hours at \$ 23.50 per hour = \$29.375 Actual results Number of wetsuits produced 1 050 Total direct inputs Direct materials 2 520 metres at \$16.75 per metre = \$42 210 Direct manufacturing labour 1 050 hours at \$24.00 per hour = \$25 200 The production manager discusses the sources of the variances: ‘A new type of material was purchased in May 2018. 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.’

#### You've reached the end of your free preview.

Want to read all 5 pages?

• Three '19

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern