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KBG Manufacturing has the following standard cost sheet for one of its products:

KBG Manufacturing has the following standard cost sheet for one of its products:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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 KBG Manufacturing has the following standard cost sheet for one of its products:

Direct materials ( 5 ft. @ $5)

$25

Direct labour (1 hours @ $10)

10

Variable overhead ( 1 hours@ $ 4)

4

Fixed overhead ( 1 hours@ $2*)

2

Standard unit cost

41

 

*Rate based on expected activity of 15,000 hours.

During the most recent year, the following actual results were recorded:

Production

10,000 units

Fixed overhead

$30,000

Variable overhead

$57,000

Direct materials (71,250 ft. purchased)

$361,620

Direct labour (15,900 hours)

$ 182,580

 

Required:

Compute the following variances:

1. Direct materials price and usage variances.

2. Direct labour rate and efficiency variances

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