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Grand Ceramics is a manufacturer of ceramic bottles. The company has these standards: Direct materials (clay). . . . . . . 1.2 kg per
Grand Ceramics is a manufacturer of ceramic bottles. The company has these standards: Direct materials (clay). . . . . . . 1.2 kg per bottle, at a cost of $0.46 per kg Direct labour. . . . . . . . . . . . . . 1/5 hour per bottle, at a cost of $14.80 per hour Static budget variable overhead. . . . . . . . . . . . . . . . . $72,100 Static budget fixed overhead. $29,870 Static budget direct labour hours. . . . . . . . . . . . . . . . . . . . 10,300 hours Static budget number of bottles. . . . . . . . . . . . . . . . . . . . 55,000 Grand Ceramics allocates manufacturing overhead to production based on standard direct labour hours. Last month, Grand Ceramics reported the following actual results for the production of 72,000 bottles: Direct materials. . . . . . . . . . 1.5 kg per bottle, at a cost of $0.70 per kg Direct labour. . . . . . . . . . . . . 1/4 hour per bottle, at a cost of $12.80 per hour Actual variable overhead. . . $104,400 Actual fixed overhead. . . . . $28,900 Requirements 1. Compute the direct labour price variance and the direct labour efficiency variance. 2. What is the total flexible budget variance for direct labour? 3. Who is generally responsible for each variance? 4. Interpret the variances
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