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E10.23 Straightforward calculation of variances; variance diagrams: тапufacturer During June, Andrew Ltd's material purchases amounted to 6500 kilograms at a price of $8 per kilogram. Actual costs incurred in the production of 2000 units were as follows: $177 375 ($27.50 per hour) ($8 per kilogram) Direct labour Direct material $34 400 The standards for one unit of Henderson's product are as follows: Direct labour Direct material Quantity: 3 hours per unit Rate: $27 per hour Required: 1. Calculate the direct material price and quantity variances and the direct labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable. Quantity: 2 kilograms per unit Price: $7.50 per kilogram 2. Draw diagrams depicting the direct material and direct labour variances, similar to the diagrams in Exhibits 10.3 and 10.5. Solution 1. DMPV = PQ (AP – SP) = 6 500 (8 – 7.5)= 3 250 (Unfavour) DMQV = SP (AQ – SQ) = 7.5 (34 400/8 – 2 000 x 2) = 2 250 (U) DLRV = AH (AR – SR) =177 375/27.5(27.5 – 270 = 3 225 (U) - | %3D

E10.23 Straightforward calculation of variances; variance diagrams: тапufacturer During June, Andrew Ltd's material purchases amounted to 6500 kilograms at a price of $8 per kilogram. Actual costs incurred in the production of 2000 units were as follows: $177 375 ($27.50 per hour) ($8 per kilogram) Direct labour Direct material $34 400 The standards for one unit of Henderson's product are as follows: Direct labour Direct material Quantity: 3 hours per unit Rate: $27 per hour Required: 1. Calculate the direct material price and quantity variances and the direct labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable. Quantity: 2 kilograms per unit Price: $7.50 per kilogram 2. Draw diagrams depicting the direct material and direct labour variances, similar to the diagrams in Exhibits 10.3 and 10.5. Solution 1. DMPV = PQ (AP – SP) = 6 500 (8 – 7.5)= 3 250 (Unfavour) DMQV = SP (AQ – SQ) = 7.5 (34 400/8 – 2 000 x 2) = 2 250 (U) DLRV = AH (AR – SR) =177 375/27.5(27.5 – 270 = 3 225 (U) - | %3D

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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E10.23 Straightforward calculation of variances; variance diagrams: manufacturer During June, Andrew Ltd's material purchases amounted to 6500 kilograms at a price of $8 per kilogram. Actual costs incurred in the production of 2000 units were as follows: $177 375 $34 400 ($27.50 per hour) ($8 per kilogram) Direct labour Direct material The standards for one unit of Henderson's product are as follows: Direct labour Direct material Quantity: 3 hours per unit Rate: $27 per hour Required: 1. Calculate the direct material price and quantity variances and the direct Quantity: 2 kilograms per unit Price: $7.50 per kilogram labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable. 2. Draw diagrams depicting the direct material and direct labour variances, similar to the diagrams in Exhibits 10.3 and 10.5. Solution 1. DMPV = PQ (AP – SP) = 6 500 (8 – 7.5)= 3 250 (Unfavour) DMQV = SP (AQ – SQ) = 7.5 (34 400/8 – 2 000 x 2) = 2 250 (U) DLRV = AH (AR – SR) =177 375/27.5(27.5 - 270 = 3 225 (U) %3D | E10.24 Straightforward calculation of variances; variance diagrams:
Transcribed Image Text:E10.23 Straightforward calculation of variances; variance diagrams: manufacturer During June, Andrew Ltd's material purchases amounted to 6500 kilograms at a price of $8 per kilogram. Actual costs incurred in the production of 2000 units were as follows: $177 375 $34 400 ($27.50 per hour) ($8 per kilogram) Direct labour Direct material The standards for one unit of Henderson's product are as follows: Direct labour Direct material Quantity: 3 hours per unit Rate: $27 per hour Required: 1. Calculate the direct material price and quantity variances and the direct Quantity: 2 kilograms per unit Price: $7.50 per kilogram labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable. 2. Draw diagrams depicting the direct material and direct labour variances, similar to the diagrams in Exhibits 10.3 and 10.5. Solution 1. DMPV = PQ (AP – SP) = 6 500 (8 – 7.5)= 3 250 (Unfavour) DMQV = SP (AQ – SQ) = 7.5 (34 400/8 – 2 000 x 2) = 2 250 (U) DLRV = AH (AR – SR) =177 375/27.5(27.5 - 270 = 3 225 (U) %3D | E10.24 Straightforward calculation of variances; variance diagrams:
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