Part 1: Calculate all materials and labor variances in a spreadsheet by using a program like Excel. Be sure to include price, quantity, wage rate, and labor efficiency variances.
Part 2: Prepare a memo to your subordinate, using a program like Word.

Summarize and analyze the actual costs in relation to the standard costs incurred for the month.
Ask for clarification of any variances that need to be investigated.
Week 5 Assignment
Body Comfort Co. is a manufacturer of high-quality products designed to help support healthy
backs and spines. Their newest product offering is a massage chair. Below is the standard cost
structure for the chair:
Standard Cost Sheet: Massage Chair
Metal tubing
6 meters @ $3.00
Leather
2 square meters @ $7.00 $14.00
Padding
3 kilograms @$3.90
$11.70
Direct labor
4 hours @ $15
$60.00
Total standard cost
$18.00
$103.70
This month, Body Comfort Co. manufactured 500 massage chairs. The following costs were
incurred:
Actual Costs Incurred for the Month: Massage Chair
Metal tubing 3,000 meters
$9,455
Leather
1,050 square meters $7,722
Padding
1,600 kilograms
$6,560
Direct Labor 1,750 hours
$27,270
Total cost
$51,007
Adapted from: Zimmerman, J. L. (2014). Accounting for decision making and control (8th ed.).
New York: NY: McGraw-Hill, “Healing Touch”, p. 565.
Suppose you are the senior controller for Body Comfort Co. and you plan to perform a variance
analysis of the massage chairs manufactured to determine if the standards are being met. Once
you have completed the analysis, you plan to show it to the production department manager and
ask for an explanation of any variances that you believe should be examined.
Week 5 Template
a) Price variance = (actual price – standard price) times quantity bought
Actual
price
Standard
price
Quantity
bought
Price variance
Metal tubing
$
3.15 $
3.00
3,000 $
455.00
Leather
$
7.35 $
7.00
1,050 $
372.00
Padding
$
4.10 $
3.90
1,600 $
320.00
Favorable or
Unfavorable
U
U
U
b) Wage rate variance = (Actual wage rate – standard wage rate) times actual hours
Actual Standard
wage rate wage rate
Actual
hours
Direct labor
$ 15.58 $ 15.00
1750 $
c)Total price variance
30.18881
7400
28.9
Wage rate
variance
1,020.00
2167
Favorable or
Unfavorable
U
U
d) Quantity variance =
(actual quantity used in production – standard quantity used in production) times the standard price
Metal tubing
Leather
Padding
Actual
Standard Standard
Quantity Quantity
Price
3000
3000 $ 3.00
1050
1000 $ 7.00
1600
1500 $ 3.90
Quantity
variance
$0.00
$350.00
$390.00
Favorable or
Unfavorable
F
U
U
e) Labor efficiency variance = (actual hours – standard hours) times standard wage
Direct labor
f) Total quantity variance
TOTAL VARIANCES
Metal tubing
Leather
Padding
Direct labor
TOTAL
Actual
Standard Standard
hours
hours
wage
1750
2000 $ 15.00
Efficiency
Favorable or
variance
Unfavorable
-3750
F
-3010
F
455
722
710
(2,730)
(843)
F
F
F
F
F
Actual Costs/Unit
Metal tubing
Leather
Padding
Direct Labor
3,000 meters
1,050 square
meters
1,600
kilograms
$9,455
1,750 hours
$27,270
$7,722
$6,560
$3.15
$7.35
$4.10
$15.58
Total cost for
manufacturing
500 chairs
$51,007
Standard Cost/Unit
Metal tubing
Leather
Padding
Direct labor
6 meters @
$3.00
2 square
meters @
$7.00
3 kilograms
@$3.90
4 hours @
$15
$18.00
$3.00
$14.00
$7.00
$11.70
$3.90
$60.00
$15.00
Total standard
cost
$103.70
NOTES (FOR 500 CHAIRS)
3.5 chairs/hr = 500
chairs/1750 labor
hours
$54.54
1 char/ 4 labor hours 15
= 0.25 chairs/hr
$55 labor cost/chair because $27,270
for 500 chairs is $54.54
0.25 chair@$15/hr = 1 chair@$60 hr
If it takes 1 labor hour to produce 3.5 chairs,
then it takes 142.86 labor hours to make
500 chairs. In other words, if 1 labor
hour/3.5 chairs = x labor hours/500 chairs
if it takes 4 labor hours to make 1 chair,
then it takes 2000 labor hours to make 500
chairs. In other words, 4 labor hours/1 chair
= x labor hours/500 chairs

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