Question
Chemco produces chemicals for cleaning pools.It sells the chemicals (a powder) infour kilogrambuckets.The company's standard costs per unit follow: Quantity Cost Total Direct material 5kg
Chemco produces chemicals for cleaning pools.It sells the chemicals (a powder) infour kilogrambuckets.The company's standard costs per unit follow:
Quantity Cost Total
Direct material 5kg $4.00perkg $20.00
Direct labour 0.25hours $10 per DL hour 2.50
Manufacturing overhead 0.25 hours $8 per DL hour 2.00
$24.50
During the month, the company produced 1,000 buckets of chemicals.The following information is known:
- The company purchased 5,500 kilograms of direct material at a cost of $21,450.
- The company had no beginninginventory, andhad 700 kilograms of material on hand at the end of the year.
- The direct labour workforce worked a total of 220 hours and was paid a total of $2,640.
- Variable overhead of $1,050 and fixed overhead of $800 were incurred.
The manufacturing overhead rate of $8 per direct labour hour can be further broken down.The company estimates variable overhead to be $5 per direct labour hour.The company expected to produce 1,100 buckets using 275 direct-labour hours during the month, and based on those estimates, variable overhead was budgeted to be $1,375 for the month.Fixed overhead was budgeted to be $825 for the month.
Needed
Compute:
- Direct Materials price and quantity variances.
- The company recentlyentered intoa contract with a new supplier who is eager for their business.Should the company continue to work with this new supplier, or should they look for a new one.
- Direct Labour rate and efficiency variances.
- The company experimented using more senior staff and fewer junior employees this month.Was the experiment successful?
- Variable Overhead spending and efficiency variances.
- Fixed Overhead spending and volume variances.
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