Exercise $10-22$ Straightforward Computation of Variances $(10$ LO $10-1,10-3)$

Saskatewan Can Company manufactures recyclable soft$-$drink cans. A unit of production is a case of $12$ dozen cans. The following standards have been set by the productionengineering staff and the controller.

Direct labor:

Quantity, $25$ hour

Rate, $$16$ per hour

Direct material:

Quantity, $4$ kilograms

Price, $$\mathrm{.}80$ per kilogram

Actual material purchases amounted to $240,000$ kilograms at $$\mathrm{.}81$ per kilogram. Actual costs incurred in the production of $50,000$ units were as follows:

Direct labor: $$211,900$ for $13,000$ hours

Direct material: $$170,100$ for $210,000$ kilograms

Required:

Use the variance formulas to compute the direct$-$material price and quantity variances, the direct$-$material purchase price variance, and the direct$-$labor rate and efficiency variances.

Indicate whether each variance is favorable or unfavorable.

Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: the standard direct$-$labor rate is $$15$ per hour, and the standard direct$-$material price is $$\mathrm{.}79$ per kilogram.