Question
Question 1: Five Stars Companys standard and actual costs per unit are provided below for the most recent period. During this period, 600 units were
Question 1:
Five Stars Companys standard and actual costs per unit are provided below for the most recent period. During this period, 600 units were actually produced.
|
|
|
| Product Standard Cost | Product Actual Cost |
| Materials | Metres | Unit Price Per Metre |
|
|
| Standard | 4 | $2.00 | $8.00 |
|
| Actual | 4.1 | $1.90 |
| $7.79 |
| Direct labour | Hours | Hourly Rate |
|
|
| Standard | 3 | $7.00 | $21.00 |
|
| Actual | 3.2 | $6.50 |
| $20.80 |
| Variable overhead | Hours | Hourly Rate |
|
|
| Standard | 2 | $3.00 | $6.00 |
|
| Actual | 2.2 | $3.10 |
| $6.82 |
| Total unit cost |
|
| $35.00 | $35.41 |
Required:
Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable.
| 1. Materials price variance | |
| 2. Materials quantity variance | |
| 3. Direct labour rate variance | |
| 4. Direct labour efficiency variance | |
| 5. Variable overhead rate variance | |
| 6. Variable overhead efficiency variance 7. Please give some managerial suggestions based on your calculation. | |
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