Materials and manufacturing labour variances, standard costs. Dunn Inc. is a privately held furniture manufacturer. For August
Question:
Materials and manufacturing labour variances, standard costs. Dunn Inc. is a privately held furniture manufacturer. For August 2009, Dunn had the following standards for one of its products, a wicker chair:
The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,000; square metres of input purchased and used, 3,700; price per square metre, $5.10; direct manufacturing labour costs, $8,820; actual hours of input, 900; labour price per hour, $9.80.
REQUIRED 1. Show your computations on the price and efficiency variances for direct materials and for direct manufacturing labour. Give a plausible explanation of why the variances occurred.
2. Suppose 6,000 square metres of materials were purchased (at $5.10 per square metre) even though only 3,700 square metres were used. Suppose further that variances are identified with their most likely control point; accordingly, direct materials price variances are isolated and traced to the purchasing department rather than to the production department.
Compute the price and efficiency variances under this approach.LO1
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9780135004937
5th Canadian Edition
Authors: Charles T. Horngren, Foster George, Srikand M. Datar, Maureen P. Gowing