has 3 items, (a), (b), and (c))
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Question 2 (This question has 3 items, (a), (b), and (c))
Morry Games developed a new play station called AWESOME. Morry Games has a standard cost system to help control its
costs. The following standards have been established for AWESOME.
• Direct materials 15 grams per AWESOME.
• Standard direct material cost per AWESOME is $10.
• Direct labour 1.2 hours per AWESOME.
• Standard cost of direct labour is $14.40 per AWESOME.
• During May the company produced 9,000 AWESOME units.
Production data for May are:
• Direct materials: 165,000 grams were purchased at a cost of S104,000; 20,000 grams of this was still in inventory at the end
of the month.
• Direct labour: 11,400 direct labour hours were worked at a cost of $142,600.
Required:
(a) Calculate Direct materials price and quantity variances.
(b) Calculate Direct labour price and quantity variances.
(c) Are the variances computed in (a) and (b) linked? Provide a brief commentary on the variances computed above, including
explanations regarding the price and the quantity variances for Direct materials, and the price and the quantity variances for
Direct labours.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa2701970-cf50-443f-9903-30807f9668a5%2Fa4ba3d10-4676-4793-8efd-1bd423c37820%2F27atn6g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 2 (This question has 3 items, (a), (b), and (c))
Morry Games developed a new play station called AWESOME. Morry Games has a standard cost system to help control its
costs. The following standards have been established for AWESOME.
• Direct materials 15 grams per AWESOME.
• Standard direct material cost per AWESOME is $10.
• Direct labour 1.2 hours per AWESOME.
• Standard cost of direct labour is $14.40 per AWESOME.
• During May the company produced 9,000 AWESOME units.
Production data for May are:
• Direct materials: 165,000 grams were purchased at a cost of S104,000; 20,000 grams of this was still in inventory at the end
of the month.
• Direct labour: 11,400 direct labour hours were worked at a cost of $142,600.
Required:
(a) Calculate Direct materials price and quantity variances.
(b) Calculate Direct labour price and quantity variances.
(c) Are the variances computed in (a) and (b) linked? Provide a brief commentary on the variances computed above, including
explanations regarding the price and the quantity variances for Direct materials, and the price and the quantity variances for
Direct labours.
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