The following questions are based on the data contained in the Dominion Company illustration used in this chapter.

– Direct materials: standard, 5 kg per unit at €2 per kg – Direct labour: standard, 1/2 hour at €16 per hour Suppose the following were the actual results for production of 8,500 units:

– Direct materials: Dominion purchased and used 46,000 kg at an actual unit price of €1.85 per kg, for an actual total cost of €85,100.

– Direct labour: Dominion used 4,125 hours of labour at an actual hourly rate of €16.80, for a total actual cost of €69,300.

1. Compute the flexible-budget variance and the price and quantity variances for direct labour and direct material.

2. In requirement 1, you should have computed a direct-materials price variance of €6,900 favorable. Is this a good outcome? Explain.