Required: a) For direct materials, compute the standard price per kilogram, the standard quantity allowed for materials in total for the month's production, and the standard quantity per unit of product. b) For direct labour, compute the actual direct labour cost per hour for the month and the labour rate variance. Show Your Working!
Required: a) For direct materials, compute the standard price per kilogram, the standard quantity allowed for materials in total for the month's production, and the standard quantity per unit of product. b) For direct labour, compute the actual direct labour cost per hour for the month and the labour rate variance. Show Your Working!
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Q2. Dodge Company produces a single product. The company has set the following standards
for materials and labor:
Standard quantity or hours per unit
Standard price or rate
Standard cost per unit
Direct Materials
? kilograms
? per kilogram
?
Materials price variance
Total materials variance
Labour efficiency variance
During the past month, the company purchased 7,000 kilograms of direct materials at a cost
of $26,250. All of this material was used in the production of 1,300 units of product. Direct
labor cost totaled $55,125 for the month. The following variances have been computed:
Direct Labour
3 hours
$15 per hour
$45
$1,750 favourable
$250 unfavourable
$6,000 favourable
Required:
a) For direct materials, compute the standard price per kilogram, the standard quantity
allowed for materials in total for the month's production, and the standard quantity per unit
of product.
b) For direct labour, compute the actual direct labour cost per hour for the month and the
labour rate variance.
Show Your Working!
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