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Gogo's Market manufactures baskets. During the year, it manufactured 5 000 baskets, using 4.2 hours of direct labour per basket at a rate of R8.
Gogo's Market manufactures baskets. During the year, it manufactured 5 000 baskets, using 4.2 hours of direct labour per basket at a rate of R8. The materials and labour standards for manufacturing the baskets are:
Direct materials (10 units @ R2) | R20 |
Direct labour (4 hours @ R7.50 per hour) | R30 |
Gogo's Market actually purchased and used 53 000 units of direct materials at a price of R2.25 per unit.
Required:
- Determine the materials price variance and whether it is favourable or unfavourable. (4)
- Determine the materials usage variance and whether it is favourable or unfavourable. (4)
- Determine the labour rate variance and whether it is favourable or unfavourable. (4)
- Determine the labour efficiency variance and whether it is favourable or unfavourable. (4)
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