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Problem 10-31 Comprehensive Variance Analysis [LO2, LO3, LO4, LO5, LO6]
Helix Company produces costumes used in the television and movie industries. Recently the company received an ongoing order for Samurai robes to be worn in an upcoming Japanese historical action series made for television. The company uses a standard costing system to assist in the control of costs. According to the standards set for these robes, the factory has a denominator activity level of 1,260 direct labour-hours each month, which should result in the production of 2,100 robes. The standard costs associated with this level of production are as follows:
Total Per Unit of Product
Direct materials $ 24,570 $ 11.70
Direct labour $ 6,300 3.00
Variable manufacturing overhead* $ 6,300 3.00
Fixed manufacturing overhead* $ 2,520 1.20
$ 18.90
*Based on direct labour-hours
During April, the factory worked only 1,240 direct labour-hours and produced 2,000 robes. The following actual costs were recorded during the month:
Total Per Unit of Product
Direct materials (6,000 metres) $ 23,200 $ 11.60
Direct labour $ 6,400 3.20
Variable manufacturing overhead $ 4,200 2.10
Fixed manufacturing overhead $ 2,200 1.10
$ 18.00
At standard, each robe should require 2.6 metres of material. All of the materials purchased during the month were used in production.
Required:
Compute the following variances for April:
1.
The materials price and quantity variances.
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