PR $23-2$B Flexible Budgeting and Variance Analysis

OBJ. $1,2,3$

I$\text{'}$m Really Cold Coat Company makes women's and men's coats. Both products require filler and lining material. The following planning information has been made available:

$\backslash$table$[[,$Standard Amount per Unit,Standard Price per Unit$],[,$Women's Coats,Men's Coats$],[$Filler$,4\mathrm{.}0lb.,5\mathrm{.}2lb.,$$$2\mathrm{.}00$ per lb$.],[$Liner$,7\mathrm{.}0yds.,9\mathrm{.}4yds.,8\mathrm{.}00$ per yd$.],[\backslash$table$[[$Standard labor$],[$time$]],0\mathrm{.}40hr,0\mathrm{.}50hr,],[,$Women's Coats,Men's Coats,$],[$Planned production,$5,000$ units,$6,200$ units,$],[$Standard labor rate,$$14\mathrm{.}00$ per hr$.,$$$13\mathrm{.}00$ per hr$.,]]$

I$\text{'}$m Really Cold Coat Company does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, I$\text{'}$m Really Cold Coat Company experienced the following actual results:

$\backslash$table$[[,$Women's Coats,Men's Coats$],[$Actual production,$4,400,5,800],[,$Actual Price per Unit,$\backslash$table$[[$Actual Quantity Purchased and$],[$Used$]]],[$Filler$,$$$1\mathrm{.}90$ per lb$.,48,000],[$Liner$,8\mathrm{.}20$ per yd$.,85,100],[,$Actual Labor Rate,Actual Labor Hours Used$],[$Women$\text{'}$s coats,$$14\mathrm{.}10$ per hr$.,1,825],[$Men$\text{'}$s coats,$13\mathrm{.}30$ per hr$.,2,800]]$

The expected beginning inventory and desired ending inventory were realized.

Instructions

Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year:

a$.$ Direct materials price, quantity, and total variance

Answer darr

Check figure: Direct materials price variance, $$12,220U$

b$.$ Direct labor rate, time, and total variance

$2.$ Why are the standard amounts in part $(1)$ based on the actual production at the end of the year instead of the planned production at the beginning of the year?