Continuous improvement (continuation of 15-18). (20 minutes)

Drogheda Chemical adopts a continuous improvement approach to setting monthly standards’ costs. Assume the direct materials standard quantity input of 10 kg per output unit and the direct manufacturing labour quantity input of 0.5 hours per output unit pertain to January 2000. The standard amounts for February 2000 are 0.997 of the January standard amount. The standard amounts for March 2000 are 0.997 of the February standard amount. Assume the same information for March 2000 as in Exercise 15-18 except for these revised standard amounts.

REQUIRED 1. Calculate the March 2000 standard quantity input amounts per output unit for direct materials and direct manufacturing labour.

Calculate the March 2000 price and efficiency variances of direct materials and direct manufacturing labour. 145