Waterway, Ltd$.$ manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows.

Standard Price Standard Quantity Standard Cost

Direct materials

$$3$ per yard $2\mathrm{.}00$  yards $$6\mathrm{.}00$ 

Direct labor

$$14$ per DLH $0\mathrm{.}75$  DLH $10\mathrm{.}50$ 

Variable overhead

$$3\mathrm{.}20$ per DLH $0\mathrm{.}75$  DLH $2\mathrm{.}40$ 

Fixed overhead

$$3$ per DLH $0\mathrm{.}75$  DLH $2\mathrm{.}25$ 

$$21\mathrm{.}15$ 

Sandy Robison, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Sandy asked CFO Suzy Summers for more information. She provided the following overhead budgets, along with the actual results for November.

The company purchased $81,600$ yards of fabric and used $93,200$ yards of fabric during the month. Fabric purchases during the month were made at $$2\mathrm{.}80$ per yard. The direct labor payroll ran $$454,475,$ with an actual hourly rate of $$12\mathrm{.}25$ per direct labor hour. The annual budgets were based on the production of $596,000$ shirts, using $446,000$ direct labor hours. Though the budget for November was based on $45,100$ shirts, the company actually produced $41,600$ shirts during the month.

Variable Overhead Budget

Annual Budget

Per Shirt

November$—$Actual

Indirect material

$$454,000$  $$1\mathrm{.}20$  $$48,700$ 

Indirect labor

$303,0000\mathrm{.}7531,300$ 

Equipment repair

$204,0000\mathrm{.}3020,100$ 

Equipment power

$46,0000\mathrm{.}157,300$ 

Total

$$1,007,000$  $$2\mathrm{.}40$  $$107,400$ 

Fixed Overhead Budget

Annual Budget

November$—$Actual

Supervisory salaries

$$262,000$  $$21,000$ 

Insurance

$348,00028,000$ 

Property taxes

$80,0006,800$ 

Depreciation

$316,00025,900$ 

Utilities

$215,00020,200$ 

Quality inspection

$279,00024,700$ 

Total

$$1,500,000$  $$126,600$ 

$($a$)$ Calculate the direct materials price and quantity variances for November. $($If variance is zero, select "Not Applicable" and enter $0$ for the amounts.$)$

Direct material price variance

$enter the direct material price variance in dollars

select an option

Direct material quantity variance

$enter the direct material quantity variance in dollars

select an option

$($b$)$ Calculate the direct labor rate and efficiency variances for November. $($Round answers to $0$ decimal places, e$.$g$.125.$ If variance is zero, select "Not Applicable" and enter $0$ for the amounts.$)$

Direct labor rate variance

$enter the direct labor rate variance in dollars

select an option

Direct labor efficiency variance

$enter the direct labor efficiency variance in dollars

select an option

$($c$)$ Calculate the variable overhead spending and efficiency variances for November. $($Round answers to $0$ decimal places, e$.$g$.125.$ If variance is zero, select "Not Applicable" and enter $0$ for the amounts.$)$

Variable overhead spending variance

$enter the variable overhead spending variance in dollars

select an option

Variable overhead efficiency variance

$enter the variable overhead efficiency variance in dollars

select an option

$($d$)$ Calculate the fixed overhead spending variance for November. $($Round answer to $0$ decimal places, e$.$g$.125.$ If variance is zero, select "Not Applicable" and enter $0$ for the amounts.$)$

Fixed overhead spending variance $enter the fixed overhead spending variance in dollars

select an option

Answer rating: 100% (QA)

Lets calculate each variance step by step a Direct Materials Variances Direct material price variance Standard Price per Yard Actual Price per Yard Ac... View the full answer