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Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.11 hour Rate, $5.50 per hour Direct Material: Quantity, 4 kilograms Price, $0.32 per kilogram Actual material purchases amounted to 55,200 kilograms at $0.350 per kilogram. Actual costs incurred in the production of 12,000 units were as follows: Direct labor: $9,492 for 1,680 hours Direct material: $17,430 for 49,800 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance

Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.11 hour Rate, $5.50 per hour Direct Material: Quantity, 4 kilograms Price, $0.32 per kilogram Actual material purchases amounted to 55,200 kilograms at $0.350 per kilogram. Actual costs incurred in the production of 12,000 units were as follows: Direct labor: $9,492 for 1,680 hours Direct material: $17,430 for 49,800 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance

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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Exercise 10-22 Straightforward Computation of Variances (LO 10-1, 10-3) Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.11 hour Rate, $5.50 per hour Direct Material: Quantity, 4 kilograms Price, $0.32 per kilogram Actual material purchases amounted to 55,200 kilograms at $0.350 per kilogram. Actual costs incurred in the production of 12,000 units were as follows: Direct labor: $9,492 for 1,680 hours Direct material: $17,430 for 49,800 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance
Transcribed Image Text:Exercise 10-22 Straightforward Computation of Variances (LO 10-1, 10-3) Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.11 hour Rate, $5.50 per hour Direct Material: Quantity, 4 kilograms Price, $0.32 per kilogram Actual material purchases amounted to 55,200 kilograms at $0.350 per kilogram. Actual costs incurred in the production of 12,000 units were as follows: Direct labor: $9,492 for 1,680 hours Direct material: $17,430 for 49,800 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance
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