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# Chapter 11 Variance Problem 20 points ABC Company produces the fuzzy bear which is a stuffed animal with 99 percent

natural fibers. Each fuzzy bear requires a standard of four square yards of cotton cloth. The standard price is \$1.00 per square yard. ABC manufactured 1,000 fuzzy bears in October. The company purchased 4,100 of cloth and paid \$1.05 per square of cloth. The company used 4,020 yards of cloth in the production of 1,000 fuzzy bears. 1. What is the material price variance? (4 points) unfavorable? (1 point) Is the variance favorable or

Material Price Variance = (AP SP) AQp = (1.05 - 1.00) 4100 = +205 (unfavorable) 2. What is the material quantity variance? (4 points) Is the variance favorable or unfavorable? (1 point) Material Quantity Variance = (AQp SQ) SP = (4020 4000) 1.00 = +20 (unfavorable) The standard quantity of direct labor for each fuzzy bear is one hour. The standard wage rate is \$12 per hour. ABC manufactured 1,000 fuzzy bears in October. The company used 980 direct labor hours and paid \$12.50 per hour. 3. What is labor rate variance? (4 points) unfavorable? (1 point) Is the variance favorable or

Labor Rate Variance = (AR SR) AH = (12.50 12.00)980 = +490 (unfavorable) 4. What is the labor efficiency variance? (4 points) unfavorable? (1 point) Is the variance favorable or