Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair
ID: 2461977 • Letter: P
Question
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:
Standard
Quantity
Standard Price
(Rate)
Standard
Unit Cost
Direct materials (plastic)
13
sq ft.
$
0.93
per sq. ft.
$
12.09
Direct labor
0.3
hr.
$
10.90
per hr.
3.27
Variable manufacturing overhead
(based on direct labor hours)
0.3
hr.
$
2.40
per hr.
0.72
Fixed manufacturing overhead
($364,800 ÷ 912,000 units)
0.40
Parker Plastic had the following actual results for the past year:
Number of units produced and sold
1,060,000
Number of square feet of plastic used
11,500,000
Cost of plastic purchased and used
$
10,350,000
Number of labor hours worked
310,000
Direct labor cost
$
3,565,000
Variable overhead cost
$
780,000
Fixed overhead cost
$
367,000
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 Variance
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:
Explanation / Answer
SQSP AQSP AQAP
13,780,000 x 0.93 11,500,000 x 0.93 10,350,000
=$12,815,400 =$10,695,000
SQ= Standard Quantity for Actual Production= 13 x 1,060,000=13,780,000
SP = Standard Price = 0.93
AQ = Actual Quantity
= 11,500,000
AQAP = Actual Cost
= $10,350,000
= 10,695,000 – 10,350,000
= 345,000 F
=12,815,400 – 10,695,000
= 2,120,400 F