$2$

Saskatewan Can Company manufactures recyclable soft$-$drink cans. A unit of production is a case of $12$ dozen cans. The following standards have been set by the production$-$engineering staff and the controller.

Direct Labor:

Quantity, $0\mathrm{.}25$ hour

Rate, $$12\mathrm{.}50$ per hour

Direct Material:

Quantity, $4$ kilograms

Price, $$0\mathrm{.}60$ per kilogram

$01$:$38$:$23$

Actual materlal purchases amounted to $200,000$ kilograms at $$0\mathrm{.}640$ per kilogram. Actual costs incurred in the production of $40,000$ unlts were as follows:

Direct labor:

$$137,700$ for $10,800$ hours

Direct material:

$$108,800$ for $170,000$ kilograms

Required:

Use the varlance formulas to compute the direct$-$materlal price and quantity varlances, the direct$-$materlal purchase price varlance, and the direct$-$labor rate and efficlency varlances. Indicate whether each varlance is favorable or unfavorable. $($Indlcate the effect of each varlance by selecting "Favorable" or "Unfavorable". Select "None" and enter $"$O$"$ for no effect $($l$.$e$.,$ zero varlance$).)$