Question - Mancini manufactures embroidered jackets. The company prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a jacket is based on static budget volume of 14,000 jackets per month:
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Direct materials (3.0 sq. ft @ $4.00 per sq. ft)
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$12.00
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Direct labor (2 hours @ $9.40 per hour)
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18.80
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Manufacturing overhead:
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Variable (2 hours @ $0.65 per hour)
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$1.30
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Fixed (2 hours @ $2.20 per hour)
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4.40
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5.70
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Total cost per jacket
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$36.50
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Actual cost and production information:
a. Actual production was 13,600 jackets.
b. Actual direct materials usage was 2.8 square feet per jacket, at an actual price of $4.10 per square foot.
c. Actual direct labor usage of 25,000 hours at a total cost of $237,500.
d. Total actual overhead cost was $79,000.
Requirements -
1. Compute the price and efficiency variances for direct materials and direct labor.
2. Journalize the usage of direct materials and the assignment of direct labor, including the related variances.