Boat Guard, which used a standard cost accounting system, manufactured 210,000 boat fenders during the year, using 1,780,000 feet of extruded vinyl purchased at $1.30 per foot. Production required 4,900 direct labor hours that cost $13.00 per hour. The materials standard was 8 feet of vinyl per fender at a standard cost of $1.40 per foot. The labor standard was 0.024 direct labor hour per fender at a standard cost of $12.00 per hour.1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor.

2. Does the pattern of variances suggest that the company’s managers have been making trade-offs? Explain.


Answer 1

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

1. Direct Material Price is

= Actual Quantity × (Standard Rate - Actual Rate)

= 1,780,000 × ($1.40 - $1.30)

= 1,780,000 × 0.10

= $178,000 Favorable

Direct Material Quantity Variance is

= Standard Rate × (Standard Quantity - Actual Quantity)

= $1.40 × [(210,000 × 8) - 1,780,000]

= $1.40 × (1,680,000 - 1,780,000)

= $1.40 × -100,000

= -$140,000 Unfavorable

Direct Labor Rate Variance is

= Actual Hour × (Standard Rate - Actual Rate)

= 4,900 hours × ($12 - $13)

= -4,900 hours × $1

= -$4,900 Unfavorable

Direct Labor Efficiency Variance is

= Standard Rate × (Standard Hours - Actual Hours)

= $12 × [(210,000 × 0.024) - 4,900]

=  $12 × [5,040 - 4,900]

= $12 × 140 hour

= $1,680 Favorable

2. As we can see that the material price variance and labor efficiency variance comes in favorable while on the other side, the material quantity variance and labor rate variance comes in unfavorable.

And we assume that the managers are purchasing the materials efficiently at lesser rates and the usage is not efficient.

Consequently , labor is efficient if the company paid at higher rate.

Therefore the managers are making trade offs.

Moreover, they are compromising of labor rate so that there would be rise  in efficiency.

And at the same time if cheaper material is buyed so the quality is compromised and the changes of wastage is high that reflects the  material quantity variance unfavorable

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Exercise 10-6 Direct Materials and Direct Labor Variances [LO10-1, LO10-2] Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 7.40 pounds $ 2.60 per pound $ 19.24 Direct labor 0.45 hours $ 8.00 per hour $ 3.60 During the most recent month, the following activity was recorded: 12,100.00 pounds of material were purchased at a cost of $2.50 per pound. All of the material purchased was used to produce 1,500 units of Zoom. 575 hours of direct labor time were recorded at a total labor cost of $5,750. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month.



Instructions are below.


Giving the following information:

Direct material:

Standard= 7.40 pounds $ 2.60 per pound

Actual= 12,100 pounds of material were purchased for $2.50 per pound.

Direct labor:

Standard= 0.45 hours $ 8.00 per hour

Actual= 575 hours of direct labor time were recorded at a total labor cost of $5,750

Units produced= 1,500

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (2.6 - 2.5)*12,100

Direct material price variance= $1,210 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

standard quantity= 1,500*7.4= 11,100

Direct material quantity variance= (11,100 - 12,100)*2.6

Direct material quantity variance= $2,600 unfavorable

To calculate the direct labor efficiency and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 1,500*0.45= 675

Direct labor time (efficiency) variance= (675 - 575)*8

Direct labor time (efficiency) variance= $800 favorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Actual rate= 5,750/575= $10

Direct labor rate variance= (8 - 10)*575

Direct labor rate variance= $1,150 unfavorable

The growing integration of the world economy is: A.increasing the intensity of competition in a wide range of manufacturing and service industries.
B. decreasing the intensity of competition in manufacturing industries, and increasing the intensity of competition in services.
C. increasing the intensity of competition in manufacturing industries, and decreasing the intensity of competition in services.
D. narrowing the scope of competition in a wide range of service, commodity, and manufacturing industries.



The correct answer to the following will be Option A.


They describe economic growth in an economy by an ongoing change in its future economic activity growth curve being dictated by an increase in domestic product nation's total demand.

Six factors are influencing economic growth, such as:

  • Natural resources.
  • Human, or technology capital.
  • Labor or population.
  • The Capital of Person.
  • Technology.
  • Law.

Therefore, the increasing integration of the global economy in a wide variety of production and manufacturing sectors is rising the frequency of competitiveness.

Revise the following wordy, unorganized paragraphs. Include an introductory statement followed by a bulleted or numbered list. Look for ways to eliminate unnecessary wording.Because all casual clothing is not suitable for the office, these guidelines will help you determine what is appropriate to wear to work. Slacks that are similar to Dockers and other makers of cotton or synthetic material pants, wool pants, flannel pants, and attractive dress synthetic pants are acceptable. Casual dresses and skirts hemmed at the knee and lower or slits at or below the knee are acceptable. Dress and skirt length should be at a length at which you can sit comfortably in public. Casual shirts and blouses, dress shirts and blouses, sweaters, tops, golf-type shirts, tunics, and turtlenecks are acceptable attire for work. Most suit jackets or sport jackets are also acceptable attire for the office. Conservative athletic or walking shoes, loafers, clogs, sneakers, boots, flats, dress heels, and leather deck-type shoes are acceptable for work.



Revision of wordy, unorganized paragraphs

Our organization's dress code allows suitable office dresses.  Find below the guidelines for allowed dresses:

  • Slacks similar to Dockers
  • Casual dresses and skirts hemmed at the lower knee
  • Comfortable dress and skirt length
  • Casual shirts and blouses are acceptable
  • Suit and sport jackets
  • Conservative athletic or walking shoes


The use of bulleted or numbered lists can help to organize wordy paragraphs.  They also eliminate some of the unnecessary wordings that have been included, thereby reducing the overall length.

Which of the following is not an important question to ask when developing a data collection plan?a. Who will be responsible for collecting the data?
b. What is the source of the data?
c. What is the reason for collecting the data?
d. Is it possible to make decisions without collecting data?



d. Is it possible to make decisions without collecting data?


There is no need for such a question since you are already requested to begin developing a data collection plan.

However, questions related to who will be responsible for collecting the data are important as they enable you to properly plan. Also, knowing the source of the data and the reason for collecting the data are important questions.

Data collection plan is used to collect data in order to make decision while collecting the data, one should not ask whether the decision can be taken without collecting data.

What is a data collection plan?

It is a thoughtful approach used to collect the baseline data as well as data which guides to the root cause. The plan includes questions like: How, When, Where and From whom the data is collected.

The questions not asked while developing  a data collection plan is whether it's possible to make decisions without collecting data.

Therefore, option d appropriately describes the above statement.

Learn more about data collection plan here:

You decided to buy apples at a grocery store somewhere in the mountains. You buy 5 pounds of apples, which are sold for $1.99/lb. (One pound is the unit of force equal to 0.454 kgx9.80 m/s where g = 9.80 m/s2 is the standard value of the acceleration due to the gravity). You overpaid for the apples, since the value of the acceleration due to the gravity at this mountain location is only gmountain 9.79 mis. Determine how much you overpaid for your 5 pounds of apples.



Amount overpaid = $0.0104 (Approx)



Quantity of apple = 5 lb

Amount paid = $ 1.99 / lb

Gravity on mountain = 9.79 m/s²


Amount overpaid


Actual mass of apple = 5 (9.79/9.80)

Actual mass of apple = 4.9948

Actual amount = 4.9948 × 1.99

Actual amount = $9.9396

Amount overpaid = Amount paid -Actual amount

Amount overpaid = [5 x 1.99] - $9.9396

Amount overpaid = $0.0104 (Approx)

Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $396,000 of indirect costs. The bankwide rate could be based on either direct labor hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor hours for Consumer Loans and a dual rate based on direct labor hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period: Department DLH Loans Processed Direct Costs Consumer 14,000 700 $ 280,000 Commercial 8,000 300 $ 180,000 Banc Corp. Trust estimates that it costs $400 to analyze and close a commercial loan. What is the overhead rate if Banc Corp. Trust allocates the remaining indirect costs using direct labor hours? Multiple Choice a. $12.55 per hour.
b. $18.00 per hour.
c. $1,000 per loan.
d. $800 per loan.



overhead rate = 18 per hours


given data

indirect costs = $396,000

Department         DLH                      Loans Processed                Direct Costs

Consumer         14,000                   700                                        $280,000

Commercial       8,000                    300                                       $180000

to find out

overhead rate


we get here overhead rate that is express as

overhead rate = (indirect\ cost)/(total\ DLH) ...............1

put here value

overhead rate = (396000)/(14000+8000)  

overhead rate = 18 per hours

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