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Dawson Inc. is a privately held furniture manufacturer For August 2018 Dawson had the folowing standards for one of its products, a wicker chal Standards
Dawson Inc. is a privately held furniture manufacturer For August 2018 Dawson had the folowing standards for one of its products, a wicker chal Standards per Chat Dired materials 2 square metres of input at 55 60 per square mere Dured manufacturing labour 05 hour of input at $1000 per hout The following data were compiled regarding actual performance actual output units (chairs) produced. 2.500 square metres of input purchased and used 4.700 prica per square metro 5560 tired manufacturing labour costs, 59,306 actual hours of input 940 labour price per hour Requirement 1. Show your computations on the rate and efficiency variances for direct materials and for Grect manufacturing labour Give a plausible explanation of why the variancis occurred Let's begin by determining the formula used to calculate the actual costs and then enter the amounts in the formula and calculate the costs Actual cost Din materials Direct manufacturing labour Next we will calculate the actual input at the budgetedrale Actual input Budgeted rate Cost Direct materials Direct manutachuring about Determine the formula and calculate the costs for the fleshle budget = Flexible budget cost Direct materials Direct manufacturing labour Now compute the rate and efficiency variances for direct materials and did manufacturing labour Label wach variance as favourable (F) or unfavourable () Rate Efficiency variances variances Dirut materiais Dired manufacturing labour Give a plausible explanation of why each variance occurred Bogin with the dired material vanances The materials rate variance There was an unexpected in materials price per square metre due to V competition The materials efficiency wanance. The production manager may have employed workers or the budgeted materials standards were set too The labour rate variant In labout rales due to a The labour afficiency variance licent workers being employed or the use of quality materials Required - X 1. Show your computations on the rate and efficiency variances for direct materials and for direct manufacturing labour. Give a plausible explanation of why the variances occurred. 2. Suppose 7.100 square metres of materials were purchased (at $5.80 per square metre) even though only 4.700 square metres were used. Suppose further that variances are identified with their most likely control point, accordingly, direct materials rate variances are isolated and traced to the purchasing department rather than to the production department. Compute the rate and efficiency variances under this approach
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