Canandaigua container company manufacturer recyclable soft drinks cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production engineering staff and the controller. Direct labour: Direct material Quantity -.30 hour Quantity 5 kilogram Rate -OMR 13 per hour Price OMR 1.10 per kilogram Actual material purchases amounted to 25,000 kilograms at OMR1.20 per kilogram. Actual cost incurred in the production of 4,000 Units were as follows: Direct Labor - OMR 22,500 for 1500 hours Direct Material - OMR 26,400 for 22,000 kilogram. Required: Use the variance formulas to compute the direct material price and quantity variances, the direct material purchase price variance and direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
Exercise 1
Canandaigua container company manufacturer recyclable soft drinks cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production engineering staff and the controller.
Direct labour: Direct material
Quantity -.30 hour Quantity 5 kilogram
Rate -OMR 13 per hour Price OMR 1.10 per kilogram
Actual material purchases amounted to 25,000 kilograms at OMR1.20 per kilogram. Actual cost incurred in the production of 4,000 Units were as follows:
Direct Labor - OMR 22,500 for 1500 hours
Direct Material - OMR 26,400 for 22,000 kilogram.
Required:
Use the variance formulas to compute the direct material price and quantity variances, the direct material purchase price variance and direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
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