Question

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 follows: Direct labor: Direct material: rect labor: $229,900 for 220.000 kilograms $211,900 for 13,000 hours $170, 100 for 210,000 kilograms Required: Fill in the amounts in the tables below. Complete this question by entering your answers in the tabs below.

Answer 1

Solution:

Direct Material Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AQ *	AP =				AQ *	SP =				SQ *	SP =
210000	$0.81	$170,100.00			210000	$0.80	$168,000.00			200000	$0.80	$160,000.00
			$2,100.00	U				$8,000.00	U
			Direct Material Price Variance					Direct Material Qty variance
Direct material price variance					$2,100.00	U
Direct material quantity variance					$8,000.00	U
Direct material cost variance					$10,100.00	U