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Question 2 John Brown Company makes plastic pails for use in the Cleaning and Sanitation Industry. The standard material and labour costs for manufacturing 1
Question 2 John Brown Company makes plastic pails for use in the Cleaning and Sanitation Industry. The standard material and labour costs for manufacturing 1 pail were given as follows: Direct materials 2.0 Kg. @ $3.00 per Kg = $6.00 Direct labour hours @ $5 per hour = $5.00 During the month of April, 25,000 Kg of material were purchased for $74750. 20,750 Kg of material were used to produce 10,000 units of finished product. Direct labour costs incurred were $49896 using 10,080 direct labour hours. There was no beginning inventory. Required: 1. What do you understand by the term 'standard cost'? 2. Compute direct materials price variance. 3. Compute direct materials quantity variance. 4. Compute direct labour rate (LPV) 5. Compute direct labour efficiency variance (LQV)
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