Wave Guard, which uses a standard cost accounting system, manufactured 230,000 boat fenders during the year, using
Question:
Wave Guard, which uses a standard cost accounting system, manufactured 230,000 boat fenders during the year, using 1,890,000 feet of extruded vinyl purchased at $1.20 per foot. Production required 4,600 direct labor hours that cost $15.50 per hour. The materials standard was 8 feet of vinyl per fender at a standard cost of $1.35 per foot. The labor standard was 0.026 direct labor hour per fender at a standard cost of $15 per hour.
Requirements
Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor.
Does the pattern of variances suggest that Wave Guard's managers have been making trade-offs? Explain.
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