Pato Company produces leather sandals. The company employs a standard costing sy

Question

Pato Company produces leather sandals. The company employs a standard costing system and has the following standards in order to produce one pair of sandals direct materials s2andar aantitystandard prioe direct labor variable overhead 2 leather strips 2.5 hours 2.5 hours ?? per strip $12 per hour ?? per hour During May, Pato purchased leather strips at a total cost of $124,250 and had direct labor totaling $171,100. During May, Pato used 13,600 leather strips in the production of sandals. Pato had no beginning inventories of any type for May. At May 31, Pato had 600 leather strips remaining in its direct materials inventory. Pato Company reported the following variances for May: Direct material price variance . . . . . . . . . . . . . .$7,100 favorable Direct labor rate variance . . . . . . . . . . . ._ . . . . . Total direct labor variance . . . . . Variable overhead spending variance .. . . . . . . . Variable overhead efficiency variance . . . . . . . $29,500 unfavorable $8,900 favorable $2,440 favorable $34,560 favorable Calculate the number of pairs of sandals produced by Pato Company in May

Explanation / Answer

total leather strips purchased = 13,600+600 14200 material price variance (Actual price - standard price)*AQ purchased = 7,100F (124,250       - x*14200 )=7100 14200x                             = (7100+124250) x                                        = (7100+124250)/14200 x = 9.25 1) Number of Sandals produced by Pato = 14200 asnwer 2) Direct material Quantity variance (Actual qty used - standard qty allowed)*standard rate (13,600    - 6000*2)*9.25 14800 U answer total direct labor variance (Actual cost - standard cost)=8,900 F (171,100       - x*2.5*12)     = 8900 x                                               = (171100+8900)/2.5*12 x                                       = 6000 units produced 3) direct price variance (Actual rate - standard rate)*AH = 29500 U (171,100    - x*12) = 29500 x                                 = (171100-29500)/12 11,800 hours Variable overhead efficiency variance (11800      - 6000*2.5)*x = 34,560 11800x - 15000x             = 34560 x                       = (34560)/3200 10.8 Variable overhead apending variance (ah *aR       - AH*Std rate)=2,440 F (x             - 11800*10.8) = 2440 x                                          = 125000 answer Actual variable overhead cost = $125,000

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