SallyMay, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of

Question:

SallyMay, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of one dozen. SallyMay’s May 2016 static budget and actual results for direct inputs are as follows:

image text in transcribed

SallyMay has a policy of analyzing all input variances when they add up to more than 10% of the total cost of materials and labor in the flexible budget, and this is true in May 2016. The production manager discusses the sources of the variances: “A new type of material was purchased in May. This led to faster cutting and sewing, but the workers used more material than usual as they learned to work with it. For now, the standards are fine.”
1. Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2016. What is the total flexible-budget variance for both inputs (direct materials and direct manufacturing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget?
2. Comment on the May 2016 results. Would you continue the “experiment” of using the new material?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Horngrens Cost Accounting A Managerial Emphasis

ISBN: 9781292211541

16th Global Edition

Authors: Srikant Datar, Madhav Rajan

Question Posted: