Saskatewan Can Company manufactures recyclable soft-drink 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 Labor: | Direct Material: |
Quantity, 0.24 hour | Quantity, 3 kilograms |
Rate, $12.00 per hour | Price, $0.58 per kilogram |
Actual material purchases amounted to 159,600 kilograms at $0.630 per kilogram. Actual costs incurred in the production of 38,000 units were as follows:
Direct labor: | $116,850 for 9,500 hours |
Direct material: | $79,002 for 125,400 kilograms |
Required:
Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)
Part 1
Direct materials price variance |
$6270 |
Unfavorable |
Direct materials quantity variance |
$6612 |
Unfavorable |
Direct materials purchase price variance |
$7980 |
Unfavorable |
Direct labor rate variance |
$2850 |
Unfavorable |
Direct labor efficiency variance |
$4560 |
Unfavorable |
Direct materials price variance = AQ used *(AR-SR) = 125400*((79002/125400)-0.58) = $6270 unfavorable
Direct materials quantity variance = SP*(AQ-SQ) = 0.58*(125400-(38000*3)) = $6612 unfavorable
Direct materials purchase price variance = PQ* (AR-SR) = 159600*(0.63-0.58) = $7980 unfavorable
Direct labor rate variance = AH*(AR-SR) = 9500*((116850/9500)-12) = $2850 unfavorable
Direct labor efficiency variance= SR*(AH-SH) = 12*(9500-(38000*0.24)) = $4560 unfavorable
Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12...
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Exercise 10-23 Determination of Variances Using Diagrams (LO 10-3) Saskatewan Can Company manufactures recyclable soft-drink 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 Labor: Quantity, 0.25 hour Rate, $16 per hour Direct Material: Quantity, 4 kilograms Price, $0.80 per kilogram Actual material purchases amounted to 240,000 kilograms at $0.81 per kilogram. Actual costs incurred in the production of 50,000 units were as...
Exercise 10-23 Determination of Variances Using Diagrams (LO 10-3) Saskatewan Can Company manufactures recyclable soft-drink 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 Labor: Quantity, 0.25 hour Rate, $16 per hour Direct Material: Quantity, 4 kilograms Price, $0.80 per kilogram Actual material purchases amounted to 240,000 kilograms at $0.81 per kilogram. Actual costs incurred in the production of 50,000 units were as...
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TIhe following information applies to the questions displayed below.j Saskatewan Can Company manufactures recyclable soft-drink 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 Labor Quantity, 0.25 hour Rate, $16 per hour Direct Material: Quantity, 4 kilograms Price, $0.80 per kilogram Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs incurred in the production of 50,000 units were as...