Materials and manufacturing-labour variances. Consider the following data collected for Great Homes, Inc.:

Costs incurred: Actual inputs X actual prices Actual inputs X standard prices Standard inputs allowed for actual outputs X standard prices Direct Direct Manufacturing Materials Labour

$240,000 $108,000 256,800 103,200 270 CHAPTER 7 270,000 96,000 Required Compute the price, efficiency, and flexible-budget variances for direct materials and direct manufacturing labour.
Excel Application For students who wish to practise their spreadsheet skills, the following is a step-by-step approach to creating an Excel spreadsheet to work dais problem.
Step-by-Step 1. At the top of a new spreadsheet, create an “Original Data” section for the data provided by Great Homes, Inc., in exactly the same format as shown above, with rows labelled “Cost Incurred: Actual Inputs X Actual Prices,” “Actual Inputs X Standard Prices,” and “Standard Inputs Allowed for Actual Outputs X Standard Prices,” and columns labelled “Direct Materials” and “Direct Manufacturing-Labour.”
2. Skip two rows, and create a section, “Variance Calculations.” Create rows for “Price Variance,” “Efficiency Variance,” and “Flexible-Budget Variance.” Create columns for “Direct Materials” and “Direct Manufacturing Labour.”
(Program your spreadsheet to perform all necessary calculations. Do not “hard-code” any of your variance calculations.)
3. Use the data in the Original Data section to calculate price variance, efficiency variance, and flexible-budget variance for direct materials and direct manufacturing labour. For example, to calculate direct materials price variance, in the cell corresponding to the “Price Variance” row and the “Direct Materials” column, enter a formula to subtract cost incurred from actual inputs times standard prices.
4. Unfavourable variances will show up as negative numbers. Ifyou want to remain consistent with the format for calculating variances presented throughout this chapter, when calculat¬
ing variances, take the absolute value of any differences you calculate in step 3 and label favourable variances with an “F” and unfavourable variances with a “U.”
5. Verify the accuracy ofyour spreadsheet. Go to your Original Data section and change costs incurred for direct manufacturing labour from $108,000 to $120,000. If you programmed your spreadsheet correctly, the flexible-budget variance for direct manufacturing labour should change to $24,000 (unfavourable).