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 8,000 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 maberials: $18.50 Standard: 3.7 feet at $5.00 per foot Actual: 4.0 feet at $4.80 per foot $19.20 Direct labor 6.75 Standard: 0.9 hours at $7.50 per hour Actual: 0.8 hours at $8.00 per hour 6.40 Variable manufacturing overhead: Standard: 0.9 hours at $2.50 per hour Actual: 08 hours at $2.75 per hour 2.20 Total cost per footbal $2750 $27.80 The president was elated when he saw that actual costs exceeded standard costs by only $0.30 per footbal He stated,-I was afraid that our unit cost might get out of hand when wo gave out those raises last year in order to stimulate output But its obvious our costs are well under control There was no inventory of materials on hand to start the year. During the year, 32,000 feet of materials were purchased and used in production 1, For drect materials: a. Compute the price and quantity variances for the year. (Indicate the effect of each variance by selecting \"Ffor favorable, \"U\" for unfavorable, and \"None\" for no effect (D.e, zero variance).) Price variance S (9600) Quanity variance ?0 2 3 4 5 9

Solution

1

Direct Material
Price Variance=AQ*(SR-AR)=(4*8000)*(5-4.80)	6400.00000000001	F
Quantity Variance=(AQ-SQ)*SR=(4*8000-3.7*8000)*5	12000	U