Green Garden Supplies makes ground covers to prevent weed growth. During May, the company sold 44,300 rolls and recorded the following cost data:

Requirements
1. Compute the price and efficiency variances for direct materials and direct labour.
2. For manufacturing overhead, compute the total variance, the flexible budget variance, and the production volume variance.
3. Prepare a standard cost income statement through gross profit to report all variances to management. Sales price was $10.60 per roll.
4. Green Garden Supplies intentionally purchased cheaper materials during May. Was the decision wise? Discuss the trade-off between the two materials variances.

Transcribed Image Text:

Standard Actual Unit Cost Total Cost Direct materials $3.75 Standard (3 kg x $1.25 per kg) Actual (136,800 kg x $1.20 per kg... $164,160 Direct labour: Standard (0.1 hr x $7.00 per hr).. Actual (4,630 hrs x $6.80 per hr... 0.70 31,484 Manufacturing overhead: Standard: Variable (0.2 machine hr x $8.00 per hr.. Fixed ($99,000 for static budget volume of 40,300 units and ours 2.50 Actual 4.10 168,400 $8.55 $364,044 Total manufacturing cost.