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Direct materials and direct manufacturing labor variances Rugged Life Inc designs and manu- factures fleece quarter-zip jackets It sells its jackets to brand-name outdoor outfitters in lots of on

Direct materials and direct manufacturing labor variances. Rugged Life, Inc., designs and manu- factures fleece quarter-zip jackets. It sells its jackets to brand-name outdoor outfitters in lots of one dozen. Rugged Life’s May 2017 static budget and actual results for direct inputs are as follows: Static Budget Number of jacket lots (1 lot = 1 dozen) 300 Per Lot of Jackets: Direct Materials 18 yards at $4.65 per yard = $83.70 Direct Manufacturing labor 2.4 Hours at $12.50 per hour= $30.00 Actual Results Number of jacket lots sold 325 Total Direct Inputs: Direct Materials 6500 yards at $4.85 per yard = $31,525 Direct Manufacturing labor 715 Hours at $12.60 per hour= $9,009 Rugged Life has a policy of analyzing all input variances when they add up to more than 8% of the total cost of materials and labor in the flexible budget, and this is true in May 2017. The production manager discusses the sources of the variances: “A new type of material was purchased in May. This led to faster cutting and sewing, but the workers used more material than usual as they learned to work with it. For now, the standards are fine.” Calculate the direct materials and direct manufacturing labor price and efficiency variances in May 2017. What is the total flexible-budget variance for both inputs (direct materials and direct manufactur- ing labor) combined? What percentage is this variance of the total cost of direct materials and direct manufacturing labor in the flexible budget?

Jun 25 2020 View more View Less

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