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Legna is a toy manufacturer who specializes in making plastic building blocks. Plastic is the primary direct material used in their production process. Legna's management
Legna is a toy manufacturer who specializes in making plastic building blocks. Plastic is the primary direct material used in their production process. Legna's management accountant provided their production manager with the following actual and budgeted cost information. Legna is a toy manufacturer who specializes in making plastic building blocks. Plastic is the primary direct material used in their production process. Legna's management accountant provided their production manager with the following actual and budgeted cost information. Budget Actual Sales Volume (boxes of building blocks) 32,000 28,200 Direct Material Cost $ 2,600,000 $ 2,261,000 In addition, the management accountant advised the production manager that they budgeted to use 2.30 pounds of plastic to produce one box of building blocks but based on actual production information the production manager determined that they used 2.15 pounds of plastic to produce one box of blocks. The management accountant informed the production manager that the variances in direct material costs can be broken down into price/rate variances and quantity/efficiency variances. However, the production manager does not know how to calculate these variances and requires your assistance. A. Calculate the direct materials price/rate variance and determine whether it is favorable or unfavorable (5 marks) B. B. Calculate the direct materials quantity/usage variance and determine whether it is favorable or unfavorable
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