EXERCISE NO. 1 The following direct materials and direct labour data are for the operations of Batista Manufacturing Company for the month of August: Costs Actual labour rate $13.00 per hour Actual materials price Standard labour rate Standard materials price $89.00 per tonne $12.00 per hour $90.00 per tonne Quantities Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 3,200 hours 910 tonnes 3,240 tonnes 900 tonnes 1. Calculate the total, price, and quantity variances for materials and labour. 2. Provide two possible explanations for each of the unfavourable variances calculated in part (a), and suggest which department might be responsible for the unfavourable result.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question
EXERCISE NO. 1
The following direct materials and direct labour data are for the operations of Batista
Manufacturing Company for the month of August:
Costs
Actual labour rate $13.00 per
hour
Actual materials
price
Standard labour
rate
Standard
materials price
$89.00 per
tonne
$12.00 per
hour
$90.00 per
tonne
Quantities
Actual hours incurred and used
Actual quantity of materials
purchased and used
Standard hours used
Standard quantity of materials
used
3,200
hours
910
tonnes
3,240
tonnes
900
tonnes
1. Calculate the total, price, and quantity variances for materials and labour.
2. Provide two possible explanations for each of the unfavourable variances calculated in part
(a), and suggest which department might be responsible for the unfavourable result.
Transcribed Image Text:EXERCISE NO. 1 The following direct materials and direct labour data are for the operations of Batista Manufacturing Company for the month of August: Costs Actual labour rate $13.00 per hour Actual materials price Standard labour rate Standard materials price $89.00 per tonne $12.00 per hour $90.00 per tonne Quantities Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 3,200 hours 910 tonnes 3,240 tonnes 900 tonnes 1. Calculate the total, price, and quantity variances for materials and labour. 2. Provide two possible explanations for each of the unfavourable variances calculated in part (a), and suggest which department might be responsible for the unfavourable result.
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education