Exercise 10-22 Straightforward Computation of Variances (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 production-engineering staff and the controller.

Direct Labor:	Direct Material:
Quantity, 0.21 hour	Quantity, 4 kilograms
Rate, $10.50 per hour	Price, $0.52 per kilogram

Actual material purchases amounted to 185,600 kilograms at $0.600 per kilogram. Actual costs incurred in the production of 32,000 units were as follows:

Direct labor:	$77,088 for 7,040 hours
Direct material:	$85,440 for 142,400 kilograms

Required: 1. 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. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)