Variances in a Dress Manufacturing Operations
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Dresses by Audrey Inc.
Audrey Inc. manufactures silk dresses in a small manufacturing facility. Manufacturing has 20 employees. Each employee presently provides 36 hours of productive labor per week. Information about a production week is as follows:
Standard wage per hour $10.65
Standard labor time per dress 20 minutes
Standard number of yards of silk per dress 3.8 yards
Standard price per yard of silk $2.75
Actual price per yard of silk $2.80
Actual yards of silk used during the week 7,500 yards
Number of dresses produced during the week 2,100
Actual wage per hour $10.80
Actual hours per week 720 hours
Instructions:
Determine (A) the standard cost per a dress for direct materials and direct labor, (B) the price variance, quantity variance, and total direct materials cost variance, and (C) the rate variance, and total direct labor cost variance.
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Solution Summary
This solution calculates the standard cost, price variance, quantity variance, total direct materials cost variance, rate variance and total direct labor cost variance for a dress manufacturing operation.
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Part A
Standard cost per dress = Standard material cost + Standard labor cost = 3.8 * $2.75 + (20/60) * $10.65 = $14.00 ($10.45 in direct material and $3.55 in direct labor)
Part B
Price variance = (Actual price - Standard price) * Actual quantity used = ($2.80 - $2.75) * 7,500 = $375 (unfavorable)
Standard quantity for 2,100 ...
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