Exercise 10-16 Materials and Labour Variances OBJECTIVE 4 QualiTech Company produces computer circuits in large batches. Materials for the circuits are formed and polished in specialized machines that require continuous maintenance and cleaning for each batch. After forming the materials for a set number of circuits, the machines are cleaned and prepared for the next batch of materials to be formed. The following standards for machine changeovers have been established: Direct materials (15 litres @ $1.80) $27.00 Direct labour (0.2 hr. @ $22.00) 4.40 Standard prime cost of a changeover $31.40 During the year, 400,000 litres of material were purchased and used for the changeover activity. There were 25,000 batches produced, with the following actual prime costs: Direct materials S740,000 Direct labour 107,500 (for 6,300 hrs.) Required: 1. Compute the materials and labour variances associated with the changeover activity, labelling each variance as favourable or unfavourable. 2. CONCEPTUAL CONNECTION What differentiates favourable variances and unfavourable variances? Question 4 (12 points) Complete Exercise 10-16 and answer the questions noted below. Remember: enter all numbers rounded to the nearest dollar. Do not enter $or, (a comma)when you are entering dollar values. The total material variance is $ (F. U). The material price variance is $ (F, U). The material usage variance is $ (F. U). The total material variance is $ AY (F, U). The material price variance is $ A (F, U). The material usage variance is $ A/ (F, U). See the next question to enter your answers for the labour variances