Athena 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 Labour: Direct Material: Quantity .25 hour Quantity, 4 kilograms Rate, $16 per hour 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 follows: Direct Labour: $211,900 for 13,000 hours Direct Material: $170,100 for 210,000 kilograms REQUIRED: (a) Use the variance formulas to compute the direct-material price and quantity variances and the direct-labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable. (Hilton, p. 480, 9-30) (b) Refer to the data in the preceding exercise. Use diagrams similar to those in Figures 6.1 and 6.2 to determine the direct-material and direct-labour variances. Indicate whether each variance is favourable or unfavourable.
Athena 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 Labour: Direct Material:
Quantity .25 hour Quantity, 4 kilograms
Rate, $16 per hour 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 follows:
Direct Labour: $211,900 for 13,000 hours
Direct Material: $170,100 for 210,000 kilograms
REQUIRED:
(a) Use the variance formulas to compute the direct-material price and quantity
variances and the direct-labour rate and efficiency variances. Indicate whether
each variance is favourable or unfavourable.
(Hilton, p. 480, 9-30)
(b) Refer to the data in the preceding exercise. Use diagrams similar to those in Figures
6.1 and 6.2 to determine the direct-material and direct-labour variances. Indicate
whether each variance is favourable or unfavourable.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
