Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.
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Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:
Direct materials (2.4 lbs. @ $0.95) | $2.28 |
Direct labor (0.75 hr. @ $7.40) | 5.55 |
$7.83 |
During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:
Direct materials | $ 63,000 |
Direct labor | $163,385 (for 22,450 hrs.) |
Required:
Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.
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