(3) Athena 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 Labour: Direct Material:

Quantity .25 hour Quantity, 4 kilograms

Rate, $16 per hour Price, $0.80 per kilogram

Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs incurred in the production of 50,000 units were as follows:

Direct Labour: $211,900 for 13,000 hours

Direct Material: $170,100 for 210,000 kilograms

REQUIRED:

(a) Use the variance formulas to compute the direct-material price and quantity variances and the direct-labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable. (Hilton, p. 480, 9-30)

(b) Refer to the data in the preceding exercise.

Use diagrams similar to those in Figures 6.1 and 6.2 to determine the direct-material and direct-labor variances.

Indicate whether each variance is favourable or unfavourable.

.25 hour Quantity, 4 kilograms Rate, $16 per hour Price, $0.80 per kilogram