Liverpool Manufacturing Limited developed the following standard costs for direct material and direct labour for one of their major products, the 45 litres heavy-duty plastic container. Each container requires the following: Types of Cost Standard quantity Standard price Direct materials 0.2 kilos £30 per kilo Direct labour 0.1 hours £17 per hour During June, Liverpool Manufacturing Limited produced and sold 10,000 containers using 2,100 kilos of direct materials at an average cost per kilo of £25 and 1,100 direct labour hours at an average wage of £16 per hour. Required: a) Calculate the following variances for June: i. Direct material price variance ii. Direct material quantity variance iv. Direct labour rate variance
Part 1 Liverpool Manufacturing Limited
Liverpool Manufacturing Limited developed the following standard costs for direct material and direct labour for one of their major products, the 45 litres heavy-duty plastic container. Each container requires the following:
|
Types of Cost |
Standard quantity |
Standard price |
|
Direct materials |
0.2 kilos |
£30 per kilo |
|
Direct labour |
0.1 hours |
£17 per hour |
During June, Liverpool Manufacturing Limited produced and sold 10,000 containers using 2,100 kilos of direct materials at an average cost per kilo of £25 and 1,100 direct labour hours at an average wage of £16 per hour.
Required:
- a) Calculate the following variances for June:
|
i. Direct material price variance |
|
ii. Direct material quantity variance |
|
iv. Direct labour rate variance |
|
v. Direct labour efficiency variance |
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