Part 1 Liverpool Manufacturing Limited Liverpool Manufacturing Limited developed the following standard costs for direct material and direct labour for one of their major products, the 45 litres heavy-duty plastic container. Each container requires the following: Types of CostStandard quantityStandard priceDirect materials0.2 kilos£30 per kiloDirect labour0.1 hours£17 per hour During June, Liverpool Manufacturing Limited produced and sold 10,000 containers using 2,100 kilos of direct materials at an average cost per kilo of £25 and 1,100 direct labour hours at an average wage of £16 per hour. Required: a) Calculate the following variances for June: i. Direct material price varianceii. Direct material quantity varianceiv. Direct labour rate variancev. Direct labour efficiency variance

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Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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Part 1 Liverpool Manufacturing Limited

Liverpool Manufacturing Limited developed the following standard costs for direct material and direct labour for one of their major products, the 45 litres heavy-duty plastic container. Each container requires the following:

Types of Cost	Standard quantity	Standard price
Direct materials	0.2 kilos	£30 per kilo
Direct labour	0.1 hours	£17 per hour

During June, Liverpool Manufacturing Limited produced and sold 10,000 containers using 2,100 kilos of direct materials at an average cost per kilo of £25 and 1,100 direct labour hours at an average wage of £16 per hour.

Required:

a) Calculate the following variances for June:

i. Direct material price variance

ii. Direct material quantity variance

iv. Direct labour rate variance

v. Direct labour efficiency variance

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