Arctic Coat Company makes women’s and men’s coats. Both products require filler and lining material. The following planning information has been made available:

 

Standard Quantity

 

 

Women’s Coats

Men’s Coats

Standard Price per Unit

Filler

2.5 lbs.

4.0 lbs.

$29.00

Liner

6.0 yds.

8.5 yds.

5.00

Standard labor time

0.40 hr.

0.60 hr.

 

Planned production

2,500 units

4,000 units

 

Standard labor rate

$12.80 per hour

$15.50 per hour

 

Arctic Coat does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, Arctic Coat experienced the following actual results:

 

Women’s Coats

Men’s Coats

Actual production

2,300

3,500

 

Actual Price per Unit

Actual Quantity Purchased and Used

Filler

$27.50

20,400

Liner

5.50

43,200

 

Actual Labor Rate

Actual Labor Hours Used

Woman’s Coat

$12.00

1,050

Man’s Coat

15.80

1,980

The expected beginning inventory and desired ending inventory were realized.

Instructions

1. Prepare the following variance analyses, based on the actual results and production levels at the end of the budget year:

a. Direct materials price, quantity, and total variance.

b. Direct labor rate, time, and total variance.

2. Why are the standard amounts in part (1) based on the actual production at the end of the year instead of the planned production at the beginning of the year?