Question

Scenario:
MadHatter manufactures baseball caps. The Accounting Faculty of PSU order 150 caps for the Accounting 211 students with ALOE imprinted on them. MadHatter has the following set of standards for the manufacture of baseball caps.

DM: ½ yard of fabric per cap
       $4.00 per yard of fabric

DL: 1 labor hour per cap
       $11.00 per labor hour

After the caps were shipped, MadHatter analyzed the actual data from production and discovered the following results.

DM: ¾ yard of fabric per cap
       $2.85 per yard of fabric

DL:        1.4 labor hours per cap
       $9..50 per labor hour
Assignment:

1. Determine the DM and DL budgets.   

Materials Required for the Production
Materials needed for each cap: ½ yard ½ * 150 = 75 yards
Material for 150 caps = $4.00 per yard of fabric 150 * 4.00 = $300

2. Calculate the Quantity and Price Variances for each budget and indicate whether each is favorable or unfavorable.

3. Provide explanations for the variances.

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1. Determine the DM and DL budgets.   

Materials Required for the Production
Materials needed for each cap: ½ yard ½ * 150 = 75 yards
Material for 150 caps = $4.00 per yard of fabric 75 * 4.00 = $300

Labor Required for the Production
Labor needed for each cap: 1 labor hour 1 * 150 = 150 labor hours
Labor hours for 150 caps = $11.00 per labor hour 150 * 11.00 = $1,650...

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