Aqua Company Ltd manufactures recyclable soft drink cans. A unit of production is a case of twelve (12) dozen cans. The following standards have been set by the production engineering staff and the management accountant: Direct Material $3.12 Quantity 4 kg Price $0.78 per kg Direct Labour $4.025 Quantity 0.25 hour Rate $16.10 per hour Actual costs incurred in the production of 50,000 units were as follows: Direct Material $170,100 for 210,000 kg Direct Labour $210,600 for 13,000 hours All materials were purchased during this time period. Required: a) Use the variance formulas to calculate the direct material price and quantity variances and the direct labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable
Aqua Company Ltd manufactures recyclable soft drink cans. A unit of production is a case of
twelve (12) dozen cans. The following standards have been set by the production engineering
staff and the
Direct Material $3.12
Quantity 4 kg
Price $0.78 per kg
Direct Labour $4.025
Quantity 0.25 hour
Rate $16.10 per hour
Actual costs incurred in the production of 50,000 units were as follows:
Direct Material $170,100 for 210,000 kg
Direct Labour $210,600 for 13,000 hours
All materials were purchased during this time period.
Required:
a) Use the variance formulas to calculate the direct material price and quantity variances and
the direct labour rate and efficiency variances. Indicate whether each variance is favourable
or unfavourable
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