Question:Tipton Company manufactures shirts. During June, Tipton made 1,200 shirts and gathered the following additional data:

Direct materials cost standard \(6.00 per yard of fabric

Direct materials efficiency standard 1.50 yards per shirt

Actual amount of fabric purchased and used 1,680 yards

Actual cost of fabric purchased and used \)10,500

Direct labor cost standard \(15.00 per DLHr

Direct labor efficiency standard 2.00 DLHr per shirt

Actual amount of direct labor hours 2,520 DLHr

Actual cost of direct labor \)36,540

Calculate the following variances:

7. Direct materials cost variance

8. Direct materials efficiency variance

9. Total direct materials variance

10. Direct labor cost variance

11. Direct labor efficiency variance

12. Total direct labor variance

$$\begin{gathered} \mathbf{Actualcostperyard}\mathbf{=}\frac{\mathbf{Actualcostoffabricpurchasedandused}}{\mathbf{Actualquantityoffabricpurchasedandused}} \\ \mathbf{=}\frac{\mathbf{10}\mathbf{,}\mathbf{500}}{\mathbf{1}\mathbf{,}\mathbf{680}} \\ \mathbf{=}\mathbf{\$}\mathbf{6}\mathbf{.}\mathbf{25}\mathbf{peryard} \end{gathered}$$

Actual cost (AC) is $6.25.

Standard cost (SC) is $6.

Actual quantity (AQ) is 1,680

$$\begin{gathered} \mathbf{DirectMaterialCostVariance}\mathbf{=}\left(\mathbf{AC}\mathbf{-}\mathbf{SC}\right)\mathbf{\times }\mathbf{AQ} \\ \mathbf{=}\left(\$\mathbf{6}\mathbf{.}\mathbf{25}\mathbf{-}\$\mathbf{6}\right)\mathbf{\times }\mathbf{1}\mathbf{,}\mathbf{680} \\ \mathbf{=}\mathbf{\$}\mathbf{420}\mathbf{U} \end{gathered}$$

$$\begin{gathered} \mathbf{StandardQuantity}\mathbf{=}\mathbf{Directmaterialsefficiencystandard}\mathbf{\times }\mathbf{Numberofshirtsproduced} \\ \mathbf{=}\mathbf{1}\mathbf{.}\mathbf{5}\mathbf{\times }\mathbf{1}\mathbf{,}\mathbf{200} \\ \mathbf{=}\mathbf{1}\mathbf{,}\mathbf{800}\mathbf{shirts} \\ \mathbf{DirectMaterialEfficiencyVariance}\mathbf{=}\left(\mathbf{AQ}\mathbf{-}\mathbf{SQ}\right)\mathbf{\times }\mathbf{SC} \\ \mathbf{=}\left(\mathbf{1}\mathbf{,}\mathbf{680}\mathbf{-}\mathbf{1}\mathbf{,}2\mathbf{00}\times 1.5\right)\mathbf{\times }\mathbf{6} \\ \mathbf{=}\mathbf{\$}\mathbf{720}\mathbf{F} \\ T\mathbf{otaldirectMaterialVariance}\mathbf{=}\mathbf{DirectMaterialcostVariance}+\mathbf{DirectMaterialEfficiencyVariance} \\ \mathbf{=}\left(\mathbf{420}\mathbf{U}\right)+\mathbf{720}\mathbf{F} \\ \mathbf{=}\mathbf{\$}\mathbf{300} \end{gathered}$$

$$\begin{gathered} \mathbf{Actualcostperdirectlaborhour}\mathbf{=}\frac{\mathbf{Actualcostofdirectlabor}}{\mathbf{Actualnumberofdirectlaborhours}} \\ \mathbf{=}\frac{\mathbf{36}\mathbf{,}\mathbf{540}}{\mathbf{2}\mathbf{,}\mathbf{520}} \\ \mathbf{=}\mathbf{\$}\mathbf{14}\mathbf{.}\mathbf{50}\mathbf{perDLHr} \\ \mathbf{Directlaborcostvariance}\mathbf{=}\left(\mathbf{AC}\mathbf{-}\mathbf{SC}\right)\mathbf{\times }\mathbf{AQ} \\ \mathbf{=}\left(\mathbf{14}\mathbf{.}\mathbf{50}\mathbf{-}\mathbf{15}\mathbf{.}\mathbf{00}\right)\mathbf{\times }\mathbf{2}\mathbf{,}\mathbf{520} \\ \mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{260} \end{gathered}$$

$$\begin{gathered} \mathbf{StandardQuantity}\mathbf{=}\mathbf{Directlaborefficiencystandard}\mathbf{\times }\mathbf{Numberofshirtsproduced} \\ \mathbf{=}\mathbf{2}\mathbf{\times }\mathbf{1}\mathbf{,}\mathbf{200} \\ \mathbf{=}\mathbf{2}\mathbf{,}\mathbf{400}\mathbf{DLHr} \\ \mathbf{DirectLaborefficiencyvariance}\mathbf{=}\left(\mathbf{AQ}\mathbf{-}\mathbf{SQ}\right)\mathbf{\times }\mathbf{SC} \\ \mathbf{=}\left(\mathbf{2}\mathbf{,}\mathbf{520}\mathbf{-}\mathbf{2}\mathbf{,}\mathbf{400}\right)\mathbf{\times }\mathbf{15}\mathbf{.}\mathbf{00} \\ \mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{800}\mathbf{U} \end{gathered}$$

$$\begin{gathered} \mathbf{Totaldirectlaborvariance}\mathbf{=}\mathbf{Directlaborcostvariance}+\mathbf{Directlaborefficiencyvariance} \\ \mathbf{=}\mathbf{1}\mathbf{,}\mathbf{260}\mathbf{F}\mathbf{-}\left(\mathbf{1}\mathbf{,}\mathbf{800}\mathbf{U}\right) \\ \mathbf{=}\mathbf{\$}\mathbf{540}\mathbf{U} \end{gathered}$$