Premium Guard, which uses a standard cost accounting system, manufactured 190.000 boat fenders during the year, using 1,620.000 m of extruded vinyl purchased at $1.35 per metro Production required 4.700 direct labour hours that cost $15.50 per hour. The materials standard was 8m of vinyl per fender at a standard cost of 51 40 per metre. The labour standard was 0.028 direct labour hour per fender at a standard cost of $1400 per hour. Compute the price and efficiency variances for direct materials and direct labour. Does the pattern of variances suggest Premium Guard's managers have been making trade-offs? Explain Begin by determining the formula for the price variance, then compute the price variances for direct materials (DM) and direct labour (DL) (Enter the results as positive numbers Label each variance as favourable (F) or unfavourable (U).) = Price variance DM DL Next, determine the formula for the efficiency variance, then compute the efficiency variances for direct materials (DM) and direct labour (DL) (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U):) ) - Eficiency variance DM ) DL 2x The direct materials price variance combined with the direct materials officiency variance suggests that managers may have used materials. The net effect is The workers who direct labour price variance combined with the direct labour officiency variance suggests that managers may have used performed more efficiently. The net effect is Premium Guard, which uses a standard cost accounting system, manufactured 190.000 boat fenders during the year, using 1,620.000 m of extruded vinyl purchased at $1.35 per metro Production required 4.700 direct labour hours that cost $15.50 per hour. The materials standard was 8m of vinyl per fender at a standard cost of 51 40 per metre. The labour standard was 0.028 direct labour hour per fender at a standard cost of $1400 per hour. Compute the price and efficiency variances for direct materials and direct labour. Does the pattern of variances suggest Premium Guard's managers have been making trade-offs? Explain Begin by determining the formula for the price variance, then compute the price variances for direct materials (DM) and direct labour (DL) (Enter the results as positive numbers Label each variance as favourable (F) or unfavourable (U).) = Price variance DM DL Next, determine the formula for the efficiency variance, then compute the efficiency variances for direct materials (DM) and direct labour (DL) (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U):) ) - Eficiency variance DM ) DL 2x The direct materials price variance combined with the direct materials officiency variance suggests that managers may have used materials. The net effect is The workers who direct labour price variance combined with the direct labour officiency variance suggests that managers may have used performed more efficiently. The net effect is
