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Part A: (6 marks) Ahlia Company developed standard costs for direct material and direct labor. In 2021, Ahlia estimated the following standard costs for
Part A: (6 marks) Ahlia Company developed standard costs for direct material and direct labor. In 2021, Ahlia estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Direct materials 0.10 pound Direct labor 0.05 hours Budgeted price pounds $31 per $16 per hour During June, Ahlia produced and sold 5,000 containers using 490 pounds of direct materials at an average cost per pound of $30 and 250 direct manufacturing labor- hours at an average wage of $15.25 per hour. Instructions: 1. Compute the direct materials price variance. (3 marks) 2. Compute the direct manufacturing labor efficiency variance. (3 marks) Part B: (7 marks) Zain company has a bottling plant for its drinks and has prepared flexible budgets: Bottles: Production costs: Materials Labor Flexible budgets 15,000 18,000 22,000 $ $ S 75,000 90,000 110,000 45,000 54,000 66,000 Maintenance 25,000 25.000 25.000 Actual production was 19,500 bottles and the production costs incurred totalled $120,000. Instructions: What is the meaningful total variance for performance evaluation purposes?
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