Ryder Company uses a standard costing system. Direct materials are purchased by Clara Jenson, the purchasing manager. Ted Ford is the production manager. Production workers are hired and evaluated by the Human Resources manager, Jack Johnson. There are no beginning inventories for November. 

Cost standards for direct materials and direct labor are given below: 

Direct materials: 3 lbs. @ $7.00 per lb., or $21.00 per case 

Direct labor: 1.5 hours @ $12 per hour, or $18.00 per case 

 

During the past month of November, Ryder budgeted to produce 10,000 cases and actually produced 9,600 cases of finished product. Actual labor costs were $178,600 for 15,200 actual hours. During November, 33,000 pounds of materials were acquired at a cost of $224,400. Only 30,000 pounds were used. 

 

Required: a. Calculate the direct materials price and quantity variances for November. Label each variance as favorable or unfavorable. 

b. Calculate the direct labor wage rate and efficiency variances for November. Label each variance as favorable or unfavorable. 

c. As the supervisor of the purchasing and production managers, how would you assign responsibility for each of the variances calculated in requirements a and b to each manager under the following two scenarios?

1. The direct materials variances are attributable to the purchase of poor quality materials in  November. 

 2. The quality of direct materials is fine but the production manager used cheaper, lessskilled workers in November.

Answer rating: 100% (QA)

Direct Materials Price Variance Actual Quantity Purchased AQ 33000 pounds Actual Price AP 224400 33000 pounds 680 per pound Standard Quantity SQ 9600 ... View the full answer