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Question - Green Tee produces 100 percent cotton t-shirts, with the following standard direct material and labor quantities and costs:
Direct material 2.0 yards 3 $3.00
Direct labor 0.7 hour 3 $7.50
Actual September production and costs for the company to produce 10,000 t-shirts were as follows:
Qty
Cost
Direct material purchased
30,000 yards
89,700
Requisitioned into production
20,120 yards
Direct labor Quantity
7,940 hours
58,756
a. What is the standard quantity of material and the standard labor time for September's production?
b. Compute the direct material and direct labor variances.
c. How might the sales and production managers explain the direct material variances?
d. How might the production and human resources managers explain the direct labor variances?
e. Record the year-end adjusting entry to close the material and labor variances, assuming that they are insignificant.
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