Question
Kawartha Inc. produces low calorie cream. The company developed the following standard costs for a case of of cream: Litres Cost per Litre Total Cost
Kawartha Inc. produces low calorie cream.
The company developed the following standard costs for a case of of cream:
Litres | Cost per Litre | Total Cost | |
Direct materials | 40 | $1.25 | $10.00 |
The actual results for the year are:
Units produced (cases) | 20,000 |
Direct materials purchased and used (litres) | 780,000 |
Direct materials cost per litre | $1.26 |
Required:
Calculate the direct material price and usage (also called efficiency) variances and use your solution to answer the following questions.
NOTE: Please enter all variances as positive numbers.
The amount of the direct material price variance is $____________.
Indicate if the direct material price variance is favourable (enter the letter F) or unfavourable (enter the letters UF).
The amount of the direct material usage variance (also called efficiency variance) is $____________.
Indicate if the direct material usage variance is favourable (enter the letter F) or unfavourable (enter the letters UF).
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