Salt-of-the-Earth Brick Company makes fired clay bricks for construction. The company uses a standard costing system that calls for 2.75 kilograms of clay at $.20 per kilogram for each brick. The standard cost for labour is .075 hour at $32 per hour for each brick. In August, Salt-of-the- Earth anticipates production to be at a level of 200,000 bricks. During August, Salt-of-the-Earth manufactured 201,000 bricks. The company purchased 553,000 kilograms of clay at a cost of $132,720. The cost of direct labour was $485,060 for 15,350 hours. a) Calculate the materials price and quantity variances and indicate whether the variances are favourable or unfavourable. b) Calculate the labour price and quantity variances and indicate whether the variances are favourable or unfavourable.
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Salt-of-the-Earth Brick Company makes fired clay bricks for construction. The company uses a
standard costing system that calls for 2.75 kilograms of clay at $.20 per kilogram for each brick. The standard cost for labour is .075 hour at $32 per hour for each brick. In August, Salt-of-the- Earth anticipates production to be at a level of 200,000 bricks. During August, Salt-of-the-Earth manufactured 201,000 bricks. The company purchased 553,000 kilograms of clay at a cost of $132,720. The cost of direct labour was $485,060 for 15,350 hours.
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a) Calculate the materials price and quantity variances and indicate whether the variances are favourable or unfavourable.
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b) Calculate the labour price and quantity variances and indicate whether the variances are favourable or unfavourable.
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