Trueform Products Inc produces a broad line of sports equipm

Trueform Products, Inc., produces a broad line of sports equipment and uses a standard cost system for control purposes. Last year the company produced 5,000 varsity footballs. The standard costs associated with this football, along with the actual costs incurred last year, are given below (per football) Standard Actual Cost Cost Direct materials $12.87 Standard: 3.9 feet at $3.30 per foot Actual: 4.3 feet at $3.20 per foot $13.76 Direct labor Standard: 1.50 hours at $4.80 per hour Actual: 1.40 hours at $5.50 per hour 7.20 7.70 Variable manufacturing overhead Standard: 1.50 hours at $2.00 per hour Actual: 1.40 hours at $2.20 per hour 3.00 3.08 Total cost per football $23.07 $24.54 The president was elated when he saw that actual costs exceeded standard costs by only $1.47 per football. He stated, \"l was afraid that our unit cost might get out of hand when we gave out those raises last year in order to stimulate output. But it\'s obvious our costs are well under control.\" There was no inventory of materials on hand to start the year. During the year, 21,500 feet of materials were purchased and used in production

Solution

1 a) material price variance = Actual quantity (standard price - actual price) actual quantity = 5000*4.3 21500 price variance = 21500(3.30-3.20) 2150 F material quantity variance = standard price/unit ( standard quantityallowed - actual quantity) 3.30*(3.9*5000-4.3*5000)= -6600 U 1 b) Debit credit calculations Raw materials 70950 4.3*5000*3.3 material price variance 2150 accounts payable 68800 4.3*3.2*5000 work in process 64350 3.3*3.9*5000 material quantity variance 6600 raw materials 70950 2 a) Labour rate variance = actual hours ( standard rate - actual rate) 1.4*5000*(4.8-5.5) -4900 U Effiency variance = standard rate/hour (standard labour hours allowed - actual labour hours) = 4.80*(1.50*5000-1.40*5000) 2400 F b) Debit Credit work in process 36000 1.5*5000*4.8 labour rate variance 4900 labour efficiency variance 2400 wages payable 38500 1.4*5000*5.5 3) Variable overhead rate variance = actual hours ( standard rate - actual rate) 1.40*5000*(2-2.20) -1400 U variable overhead efficiency variance = standard rate *(standard labour hours allowed - actual hours) 2*(1.50*5000-1.40*5000) 1000 F