Q. 10

Part A

MacDean Company manufactures 100 kg bags of fertilizer that have the following unit standard costs for direct materials and direct labour:

Direct materials (100 kg @ $1.00 per kilogram)

$100.00

Direct labour (0.5 hours at $24 per hour)

12.00

Total standard direct cost per 100 kg bag

$112.00

The following activities were recorded for October:

1,000 bags were manufactured.

95,000 kg of materials costing $76,000 were purchased.

102,500 kg of materials were used.

$12,000 was paid for 475 hours of direct labour.

There were no beginning or ending work-in-process inventories.

Required:

A.

Compute the direct materials variances.

B.

Compute the direct labour variances.