Question
Brady Garden Products Inc. manufactures a variety of pots and holders for indoor and outdoor plants. One of the holders is 2 feet in length,
Brady Garden Products Inc. manufactures a variety of pots and holders for indoor and outdoor plants. One of the holders is 2 feet in length, and is meant to support the growth of heavy vines such as ornamental gourds. It is made of a fibrous fabric called Fibretuff, consisting of a mixture of cotton and polyethylene. The standard cost card for the holder displays the following information:
Direct materials, 4 metres of Fibretuff at $3.50 per metre | $ 14 |
Direct labour, 1.5 direct labour hours at $12 per direct labour hour | 18 |
Variable manufacturing overhead, 1.5 direct labour hours at $2 per direct labour hour | 3 |
Fixed manufacturing overhead, 1.5 direct labour hours at $6 per direct labour hour | 9 |
Total standard cost per unit | $ 44 |
The following additional information is available for the year just completed:
- The company manufactured 20,000 units of the holder during the year .
- A total of 78,000 metres of Fibretuff was purchased during the year at a cost of $3.75 per metre. All of this material was used to manufacture the 20,000 units. There were no beginning or ending inventories of the holder for the year.
- The company worked 32,500 direct labour hours during the year at a cost of $11.80 per hour.
- Overhead cost is applied to products on the basis of standard direct labour hours. Data relating to manufacturing overhead costs follow:
Denominator activity level (direct labour hours) | 25,000 |
Budgeted fixed overhead costs (from the flexible budget) | $150,000 |
Actual fixed overhead costs | $148,000 |
Actual variable overhead costs | $68,250 |
Required:
- Compute the direct materials price and quantity variances for the year.
- Compute the direct labour rate and efficiency variances for the year.
- Compute the variable overhead spending and efficiency variances for the year.
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