Sam's Summertime Place makes various beach sandals. During the last quarter the company's profit margin was...

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Sam's Summertime Place makes various beach sandals. During the last quarter the company's profit margin was not as high as it budgeted for the number of units sold in the sandals department. Since the price per sandal has remained the same, Sam suspects the issue has to do with cost overruns but has been unable to identify the exact issue. Sam provides the following information about her company's production standards and actual performance for the quarter: Standard Quantity Standard Price or Rate Standard Cost Direct materials (sq. feet) $ 4.00 $0.65 $ 2.60 Direct labor (hours) $ 1.50 $ 15.75 $ 23.63 Variable manufacturing overhead* $ 1.00 $ 4.50 $ 4.50 Total standard cost per unit $ 30.73 *Based on labor hours Sandals produced this quarter Square feet of material purchased Price per square foot purchased Square feet used in production Total labor hours worked Average rate per labor hour 12,000 55,000 $ 0.70 49,000 17,600 $ 16.50 A What is the materials price variance? Is it Favorable or unfavorable? B What is the labor rate variance? Is it Favorable or unfavorable? C What is the material quantity variance? Is it Favorable or unfavorable? D What is the labor efficiency variance? Is it Favorable or unfavorable? Sam's Summertime Place makes various beach sandals. During the last quarter the company's profit margin was not as high as it budgeted for the number of units sold in the sandals department. Since the price per sandal has remained the same, Sam suspects the issue has to do with cost overruns but has been unable to identify the exact issue. Sam provides the following information about her company's production standards and actual performance for the quarter: Standard Quantity Standard Price or Rate Standard Cost Direct materials (sq. feet) $ 4.00 $0.65 $ 2.60 Direct labor (hours) $ 1.50 $ 15.75 $ 23.63 Variable manufacturing overhead* $ 1.00 $ 4.50 $ 4.50 Total standard cost per unit $ 30.73 *Based on labor hours Sandals produced this quarter Square feet of material purchased Price per square foot purchased Square feet used in production Total labor hours worked Average rate per labor hour 12,000 55,000 $ 0.70 49,000 17,600 $ 16.50 A What is the materials price variance? Is it Favorable or unfavorable? B What is the labor rate variance? Is it Favorable or unfavorable? C What is the material quantity variance? Is it Favorable or unfavorable? D What is the labor efficiency variance? Is it Favorable or unfavorable?

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To calculate the variances we need to compare the actual costs with the standard costs based on the information provided Lets calculate each variance A Materials Price Variance The materials price var... View the full answer