Camping Supply Company has developed a new camping lamp that runs on solar power. The solar cells charge in the sun all day and then the lamp is ready to run when the sun goes down. The company has a standard costing system to help control costs and has established the following standards related to the new camping lamp: 1. Direct materials: 2 small solar cells per lamp at $0.50 per cell 2. Direct labour: 0.50 hours per lamp at $15 per hour During March, the company produced 4,000 camping lights. Production data for March are as follows: 1. Direct materials: 12,000 small solar cells were purchased at a cost of $0.45 per cell; 5,500 of these were still in inventory at the end of the month (there was no opening inventory). 2. Direct labour: 1,600 direct labour-hours were worked at a cost of $25,600. Required: 1. Compute the following variances for March: a. Direct materials price and quantity variances. b.Direct labour rate and efficiency variances. 2. Prepare a brief explanation of the possible causes of each variance.
Camping Supply Company has developed a new camping lamp that runs on solar power. The solar cells charge in the sun all day and then the lamp is ready to run when the sun goes down. The company has a standard costing system to help control costs and has established the following standards related to the new camping lamp: 1. Direct materials: 2 small solar cells per lamp at $0.50 per cell 2. Direct labour: 0.50 hours per lamp at $15 per hour During March, the company produced 4,000 camping lights. Production data for March are as follows: 1. Direct materials: 12,000 small solar cells were purchased at a cost of $0.45 per cell; 5,500 of these were still in inventory at the end of the month (there was no opening inventory). 2. Direct labour: 1,600 direct labour-hours were worked at a cost of $25,600. Required: 1. Compute the following variances for March: a. Direct materials price and quantity variances. b.Direct labour rate and efficiency variances. 2. Prepare a brief explanation of the possible causes of each variance.
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 3EB: Use the following information to create a standard cost card for production of one photography drone...
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Transcribed Image Text:Camping Supply Company has developed a new camping lamp that runs on solar power. The solar cells
charge in the sun all day and then the lamp is ready to run when the sun goes down. The company has a
standard costing system to help control costs and has established the following standards related to the new
camping lamp:
1. Direct materials: 2 small solar cells per lamp at $0.50 per cell
2. Direct labour: 0.50 hours per lamp at $15 per hour
During March, the company produced 4,000 camping lights. Production data for March are as follows:
1. Direct materials: 12,000 small solar cells were purchased at a cost of $0.45 per cell; 5,500 of these were
still in inventory at the end of the month (there was no opening inventory).
2. Direct labour: 1,600 direct labour-hours were worked at a cost of $25,600.
Required:
1. Compute the following variances for March:
a. Direct materials price and quantity variances.
b.Direct labour rate and efficiency variances.
2. Prepare a brief explanation of the possible causes of each variance.
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