The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below: Standard Quantity Standard Price Standard or Hours or Rate Cost Direct materials 6.0 Direct labour 0.6 millilitres hours $ $ Materials price variance Materials quantity variance 0.30 per millilitre $ 1.80 During the most recent month, the following activity was recorded: 1. 22,500 millilitres of material was purchased at a cost of $0.25 per millilitre. 2. All of the material was used to produce 3,000 bottles of Clean-All. 3. 750 hours of direct labour time was recorded at a total labour cost of $9,000. Labour rate variance Labour efficiency variance 12.00 per hour Required: 1. Compute the direct materials price and quantity 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).) $7.20 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 Standard or Hours or Rate Cost Direct materials 6.0 Direct labour 0.6 millilitres hours $ $ Materials price variance Materials quantity variance 0.30 per millilitre $ 1.80 During the most recent month, the following activity was recorded: 1. 22,500 millilitres of material was purchased at a cost of $0.25 per millilitre. 2. All of the material was used to produce 3,000 bottles of Clean-All. 3. 750 hours of direct labour time was recorded at a total labour cost of $9,000. Labour rate variance Labour efficiency variance 12.00 per hour Required: 1. Compute the direct materials price and quantity 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).) $7.20 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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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 Quantity
or Hours
Standard Price Standard
or Rate
Cost
millilitres
Direct materials 6.0
Direct labour
0.6
hours
$
Ś
Materials price variance
Materials quantity variance
0.30
12.00
During the most recent month, the following activity was recorded:
1. 22,500 millilitres of material was purchased at a cost of $0.25 per millilitre.
2. All of the material was used to produce 3,000 bottles of Clean-All.
3. 750 hours of direct labour time was recorded at a total labour cost of $9,000.
Labour rate variance
Labour efficiency variance
per millilitre $ 1.80
per hour
$ 7.20
Required:
1. Compute the direct materials price and quantity 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).)
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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