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, .25 hour | Quantity,4 kilograms |
Rate,$16 per hour | Price,$.80 per kilogram |
Actual material purchases amounted to 240,000 kilograms at $.81per kilogram. Actual costs incurred in the production of 50.000 units were as follows:
Direct labor: | $21 1,900 for 13,000hours |
Direct material: | $170,100 for 210,000 kilograms |
Required:
1. Use the variance formulas to compute the direct-material price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
2. Build a spreadsheet:Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: the standard direct-labor rate is S15 per hour, and the standard direct-material price is $.79 per kilogram
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