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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:

  1. Determine the materials price variance and whether it is favourable or unfavourable. (4)
  2. Determine the materials usage variance and whether it is favourable or unfavourable. (4)
  3. Determine the labour rate variance and whether it is favourable or unfavourable. (4)
  4. Determine the labour efficiency variance and whether it is favourable or unfavourable. (4)

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