Quality Guard, which uses a standard cost accounting system, manufactured 180,000 boat fenders during the year, using 1,360,000 m of extruded vinyl purchased at $1.10 per metre. Production required 4,800 direct labour hours that cost $12.50 per hour. The materials standard was 7 m of vinyl per fender at a standard cost of $1.25 per metre. The labour standard was 0.028 direct labour hour per fender at a standard cost of $11.00 per hour. Compute the price and efficiency variances for direct materials and direct labour. Does the pattern of variances suggest Quality 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).)

Actual price per input unit - standard price per input unit x actual quantity of input = 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).)

Actual quantity of output - standard quantity of input x standard price per input unit = effciency variance

DM

DL

The______ direct materials price variance combined with the_____ direct materials efficiency variance suggests that managers may have used_____materials. The net effect is___

The_____direct labour price variance combined with the______direct labour efficiency variance suggests that managers may have used_______workers who performed

more efficiently. The net effect is_________