Problem 10-22, what is answer for question 1 and 2?

Chopter 10 Standard Costs and Overhead Analysis PROBLEM 10-22 Basic Variance Analysis lL02. L03. L041 VitalAid Inc. manufactures a vacuum-sealed high-protein food supplement that it sells to food aid organizations around the world. The company uses variable costing in conjunction with a standard costing system and has established the following standards for one package of VitalAid bars: Standard Standard Direct materials iret labor Variable manufacturing overhead otal standard variable cost.... Standard Quantity or Hours 350 grams 025 hours 05 hours Price or Rate Cost $t200 per kg $420 $1300 per hour $325 $160 per hour $080 825 During October, the company recorded the following activity relative to production of VitalAid a. The company produced 4.000 packages during October b. A total of 1800 kilograms of material was purchased at a cost of $19800. C. There was no beginning inventory of materials: however, at the end of the month. 30 kilograms of material remained in ending inventory d The company employs 5 people to work on the production of VitalAid. During October each employee worked an average of 18S hours at an average rate of $14.00 per hour Variable manufacturing overhead is assigned to VitalAid on the basis of direct hours Variable manufacturing overhead costs during October totalled $185o. The company's management is anxious to determine the efficiency of the Vita e. duction activities. Required: L. a. Compute the price and quantity variances for direct materials used in the prodc tion of VitalAid b The materials were purchased from a new supplier who is anxious to enter long-term purchase contract. Would you recommend that the company sign the c tract? Explain. Compute the rate and efficiency variances for labour employed in the production VitalAid the con 2. a b In the past.the S people employed in the production of VitalAid consisted of 3 senior and 2 assistants. During October, the company experimented with 1 assistant. Would you recommend that the new labour mix be workers ued? Explain. contin