Acc206 Principles of Accounting: Week 4 Chapter 7 Exercise 3 - Banner Company

Acc206 Principles of Accounting
Week 4 Assignment

Chapter 7 Exercise 3
3. Variances for direct materials and direct labor

Banner Company manufactures flags of various countries. Each flag has a standard of eight square feet of fabric and three hours of direct labor time.
Information about recent production activity follows.
Actual cost of fabric: $4.50 per square foot
Fabric consumed: 32,080 square feet
Standard price per square foot of fabric: $4.25
Standard direct labor rate: $10.00 per hour
Actual direct labor rate: $10.20 per hour
Actual labor hours worked: 11,940
Actual production completed: 4,000 flags

a. Compute the materials price variance and the materials quantity variance.
b. Compute the labor rate variance and the labor efficiency variance.
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