The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below: Standard Quantity Standard Price or Rate $ 0.33 per millilitre $12.00 per hour Direct materials Direct labour During the most recent month, the following activity was recorded: a. 29,500 millilitres of material was purchased at a cost of $0.28 per millilitre. b. All of the material was used to produce 3,000 bottles of Clean-All. c. 750 hours of direct labour time was recorded at a total labour cost of $9,000, or Hours 5.0 millilitres 0.2 hours Materials price variance Materials quantity variance Required. 1. Compute the direct materials price and quantity variances for the month. (Indicate the effect of each variance by selecting favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Standard Cost $1.65 $2.40 Labour rate variance Labour efficiency variance 2. Compute the direct labour rate and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below: Standard Quantity Standard Price or Rate $ 0.33 per millilitre $12.00 per hour Direct materials Direct labour During the most recent month, the following activity was recorded: a. 29,500 millilitres of material was purchased at a cost of $0.28 per millilitre. b. All of the material was used to produce 3,000 bottles of Clean-All. c. 750 hours of direct labour time was recorded at a total labour cost of $9,000, or Hours 5.0 millilitres 0.2 hours Materials price variance Materials quantity variance Required. 1. Compute the direct materials price and quantity variances for the month. (Indicate the effect of each variance by selecting favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Standard Cost $1.65 $2.40 Labour rate variance Labour efficiency variance 2. Compute the direct labour rate and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Chapter1: Financial Statements And Business Decisions
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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:The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below:
Standard Price
or Rate
Standard
Cost
$1.65
$ 0.33 per millilitre
$12.00 per hour
$2.40
Direct materials
Direct labour
Standard Quantity
During the most recent month, the following activity was recorded:
a. 29,500 millilitres of material was purchased at a cost of $0.28 per millilitre.
b. All of the material was used to produce 3,000 bottles of Clean-All.
c. 750 hours of direct labour time was recorded at a total labour cost of $9,000.
Materials price variance
Materials quantity variance
or Hours
5.0 millilitres
9.2 hours
Required.
1. Compute the direct materials price and quantity variances for the month. (Indicate the effect of each variance by selecting
favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Labour rate variance
Labour efficiency variance
2. Compute the direct labour rate and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for
favourable. "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
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