Problem 11-3A Hopkins Clothiers is a small company that manufactures tall-men’s

Question

Problem 11-3A

Hopkins Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2014, 10,300 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 13,000 direct labor hours. All materials purchased were used.

Cost Element

Standard (per unit)

Actual

Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $50,700, and budgeted variable overhead was $35,100.

(a) Compute the total, price, and quantity variances for (1) materials and (2) labor. (Round answers to 0 decimal places, e.g. 125.)

(b) Compute the total overhead variance.

Cost Element

Standard (per unit)

Actual

Direct materials 8 yards at $4.40 per yard $357,803 for 83,210 yards ($4.30 per yard) Direct labor 1.30 hours at $14.00 per hour $201,766 for 14,080 hours ($14.33 per hour) Overhead 1.30 hours at $6.60 per hour (fixed $3.90; variable $2.70) $49,500 fixed overhead $37,000 variable overhead

Explanation / Answer

1)Material cost variances:

Material cost variance=SQ*SR-AQ*AR=82,400*$4.4-83,210*$4.3=$4,757-F

Material Quanity Variance=SQ*SR-AQ*SR=-$3,564-U

Material price variance=AQ*SR-AQ*AR=$8,321-F

2) Labour cost variances:

Labour cost variance=SH*SR-AH*AR=13,390*$14-14,080*$14.33=-$14,306-U

Labour Eficiency Variance=SH*SR-AH*SR=-$9,660-U

Labour rate variance=AH*SR-AH*AR=-$4,646-U

Variable overhead variance=Budgted-Actual=$35,100-$37,000=-$1900-U

Fixed overhead variance=Budgted-Actual=$50,700-$49,500=$1,200-F

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