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Problem - Green Tee produces 100 percent cotton t-shirts, with the following standard direct material and labor quantities and costs: Direct material2.0 yards 3 $3.00 Direct labor0.7 hour 3 $7.50 Actual September production and costs for the company to produce 10,000 t-shirts were as follows: 287 Direct material Purchased Requisitioned into production Direct labor Quantity 30,000 yards 20,120 yards 7,940 hours Cost $89,700 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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