Baby its Cold Outside Inc. makes womens and mens overcoats. Both products require filler and lining material. The following planning information has been made available:
Baby its Cold Outside Inc. makes womens and mens overcoats. Both products require filler and lining material. The following planning information has been made available:
Standard Amounts
Womens Coats Mens Coats Standard Price per unit
Filler 2.2 lbs/coat 3.5 lbs/coat $1.00 per lb.
Liner 5.5 yds./coat 8.0 yds./coat $6.50
Standard labor time 0.30 hrs /coat 0.40 hrs/coat
Standard labor rate $12.50 per hr. $11.00 per hr
Planned production 3,000 coats 5,000 coats
Baby Its Cold Outside does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, Baby Its Cold Outside experienced the following actual results:
Actual Amounts
Actual Quantity Used Actual Price per unit
Filler 24,800 lbs $0.90 per lb.
Liner 56,500 yds $6.75 per yd.
Womens Coats Mens Coats
Actual labor hours used 1,000 1,900
Actual labor rate $12.70 per hr $11.20 per hr
Actual production 3,200 coats 4,900 coats
Determine the price variance, quantity variance, and overall variance for direct material and direct labor for both the womens coats and the mens coats. Explain what the variances indicates and what are some possible causes for the variances?
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