Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair
ID: 2412481 • Letter: P
Question
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Standard Standard QuantityStandard Price (Rate)Unit Cost Direct materials (plastic) Direct labor Variable manufacturing overhead (based on 8 sq ft.S1.02 per sq. ft. 0.3 hr 0.3 hr $ 11.10 per hr S 2.60 per hr S 8.16 3.33 0.78 direct labor hours) Fixed manufacturing overhead $383,880+ 914,000 units) 0.42 Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,080,000 11,600,000 $ 11,600,000 312,000 $ 3,681,600 S 800,000 S 369,000 Required Calculate Parker Plastic's direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable "U" for unfavorable.) Direct Material Price Variance Direct Material Quantity VarianceExplanation / Answer
Std Qty per unit of output: 8 sq. ft. Std cost per sq. ft.: 1.02 per sq. ft. Actual output: 1080000 Std qty allowed: 1080000*8 = 8640,000 sq. ft. Actual qty purchased and used: 11600,000 sq. ft. Actual cost per sq. ft (11600,000/11600,000) = 4 1.00 per sq. ft. Material Quantity variance: Std cost per sq. ft. (Std qty-Actual Qty) 1.02 (8640,000 - 11600,000) = $ 3019,200 Unfav Material Price variance: Actual Qty (Std cost -Actual cost per sq. ft) 11600,000 (1.02 -1.00) = $ 232000 Fav