Question

Determining materials price and usage variances Radinka Swimsuit Specialties, Inc., makes fashionable women’s swimsuits. Its most popular swimsuit, with the Sarong trade name, uses a standard fabric amount of 6 yards of raw material with a standard price of $7.50 per yard. The company planned to produce 100,000 Sarong swimsuits in 2014. At the end of 2014, the company’s cost accountant reported that Radinka had used 636,000 yards of fabric to make 102,000 swimsuits. Actual cost for the raw material was $4,960,800.

Required
a. Should the flexible budget materials variances be based on the planned volume of 100,000 swimsuits or on the actual volume of 102,000 swimsuits?
b. Compute the actual price per yard of fabric.
c. Compute the standard quantity (yards of fabric) required to produce the swimsuits.
d. Compute the materials price variance and indicate whether it is favorable (F) or unfavorable (U).
e. Compute the materials usage variance and indicate whether it is favorable (F) or unfavorable (U).



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  • CreatedFebruary 07, 2014
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