2 0.15 points per answer 3 Boat Guard, which used a standard cost accounting system, manufactured 210,000 boat fenders during the year, using 1,780,000 feet of extruded vinyl purchased 4 at $1.30 per foot. Production required 4,900 direct labor hours that cost $13.00 per hour. The materials standard was 8 feet of vinyl per fender at a standard cost of 5 $1.40 per foot. The labor standard was 0.024 direct labor hour per fender at a standard cost of $12.00 per hour. 6 7 Requirement 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. (Enter the variances 8 as positive numbers. Enter the currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (L 9 Abbreviations used: DM = Direct materials, DL = Direct labor.) 10 C D E F G H J K L 1 Begin with the variances for direct materials. First, determine the formula for the direct materials price variance, then compute the price variance for direct materials. 2 (Assume that the quantity of materials purchased is equal to the quantity of materials used.) 13 14 15 16 17 x ( x ( DM price variance 18 Determine the formula for the direct materials quantity variance, then compute the quantity variance for direct materials. 19 20 21 22 x ( x ( = DM quantity variance = 23 Next, compute the variances for direct labor. First determine the formula for the rate variance, then compute the rate variance for direct labor. DL rate variance 24 25 x ( X E11-25A (5 pts) + = Chapter 11 E11-20A (5 pts) Ready Accessibility investigate 6:27 PM 40022 6 818 7 Determine the formula for the direct labor efficiency variance, then compute the efficiency variance for direct labor. 28 29 x ( x ( =DL efficiency variance 30 31 32 Requirement 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. 33 The favorable direct materials price variance combined with the unfavorable direct materials quantity variance suggests that managers may have used 34 lower quality materials. The net effect is 35 36 The unfavorable direct labor rate variance combined with the favorable direct labor efficiency variance suggests that managers may have used 37 higher-paid workers who performed more efficiently. The net effect is 38