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6. Markeba Corporation produces two products: Alpha and Zeta, which pass through two operations, Cleaning and Finishing. Each of the products uses two raw
6. Markeba Corporation produces two products: Alpha and Zeta, which pass through two operations, Cleaning and Finishing. Each of the products uses two raw materials- Sodium and Nitrite. The company uses a standard cost card system, with the following standards for each product (on a per unit basis): Standard Raw material Standard labour time Product Sodium Nitrite Cleaning Finishing Alpha 1.8 kilos 2.0 liters 0.20 hours 0.80 hours Zeta 3.0 kilos 4.5 liters 0.35 hours 0.90 hours Information relating to materials purchased and materials used in production during May follows: Material Purchases Purchase Cost Standard Price Used in production Sodium 14,500 kilos Nitrite 15,500 liters $52,200 $20,925 $3.5 per kilo 8500 kilos $1.4 per liter 13000 liters The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labour rate is $19.80 per hour for Cleaning and $19.20 per hour in Finishing. c. During May, 1200 direct labour hours were worked in Cleaning at a total labour cost of $27000 and 2850 direct labour hours were worked in Finishing at a total labour cost of $59,850. d. Production during May was 1500 Alphas and 2000 Zetas. Required: 1. Prepare a standard cost card for each product. 2. Compute the materials price and quantity variances for each material 3. Compute the labour rate and efficiency variances for each operation
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