Grandma's Attic Company Produces Soft Pillows Made from Goose Down

question 8

Essay

Grandma's Attic Company produces soft pillows made from goose down.The company uses a standard cost system and has set the following standards for materials and labor for each pillow:
During the month,the company produced 1,000 goose down pillows.Actual geese purchased were 5,100,at $4 per goose.Actual fabric purchased was 2,900 yards at $2.10 per yard.There were no beginning or ending inventories of geese or fabric.Actual direct labor was 5,200 hours at $7.75 per hour.

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Definitions:

Unfavorable Effect

Occurs when actual costs exceed budgeted costs, or actual revenues are less than expected, negatively impacting financial performance.

Trained Workers

Personnel who have received specific training to perform their job duties effectively and efficiently.

Variances

Differences between planned or standard costs and actual costs, analyzed to understand and manage costs within financial planning.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (or standard) cost of those materials.