Can the Can Ltd manufactures recyclable soft drink cans. A unit of production is a box of 12 cans. The following standards have been set by the production engineering staff and the factory accountant:

Direct material

Direct labour

Quantity: 4 kilograms

Quantity: 0.25 hour

Price: $0.90 per kilogram

Rate: $33 per hour

Actual material purchases amounted to 240 000 kilograms at $0.93 per kilogram. Actual costs incurred in the production of 50 000 units were as follows:

Direct material

$195 300 for 210 000 kilograms

Direct labour

$448 500 for 13 000 hours

Required:

1. Construct an Excel spreadsheet to calculate the direct material price and quantity variances and the direct labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable.
2. Use your spreadsheet to show how the solution will change if the following information changes: standard direct material price is $0.885 per kilogram and standard direct labour rate is $36.