Question 27 At the end of June, the manager of the B.C. manufacturing plant was provided with the following variance analysis report. Favourable (F)/ Unfavourable (U) Budget 306,000 Actual 323,000 Variance 17,000 Production in units Production costs: Direct material Direct labour Variable overhead costs Fixed overhead costs Total production costs $643,849 1,224,000 145,350 175,950 $2,189,149 $653,125 1,262,420 152,052 172,170 $2.239,767 $19,276) (38,420) (6,702) 3,780 (50.618) The manager immediately called the production supervisor, demanding an explanation for the large unfavourable variance for the quarter. The production supervisor was puzzled. He thought the cost-cutting measures they had incorporated were beginning to work. He certainly wasn't expecting such a large discrepancy. The standard rates the plant was using with its normal costing system are summarized below. Volume Cost Direct material 1.10 kg per unit $1.90 per kg Direct labour 0.25 hour per unit $16.00 per hour Predetermined overhead rate: Variable 0.25 hoor per unit $1.90 per hour Fixed 0.25 hour per unit $2.30 per hour Other relevant information: 1. 2. 3. A total of 363,000 kg of direct materials were purchased during the quarter at a cost of $1.95 per kilogram. A total of 343,750 kg of direct materials were used in production to manufacture 323,000 units. Payroll recorded 79,900 direct labour hours at an average cost of $15.50 per hour. (al) Calculate the following production variances. Material price variance Material quantity variance The manager immediately called the production supervisor, demanding an explanation for the large unfavourable variance for the quarter. The producon CODVISO WAS cost-cutting measures they had incorporated were beginning to work. He certainly wasn't expecting such a large discrepancy. HE The standard rates the plant was using with its normal costing system are summarized below. Volume 1.10 kg per unit $1.90 per kg 0.25 hour per unit $16.00 per hour Direct material Direct labour Predetermined overhead rate: Variable Fixed 0.25 hour per unit 0.25 hour per unit $1.90 per hour $2.30 per hour Other relevant information: 1. 2. 3. A total of 363,000 kg of direct materials were purchased during the quarter at a cost of $1.95 per kilogram. A total of 343,750 kg of direct materials were used in production to manufacture 323.000 units. Payroll recorded 79,900 direct labour hours at an average cost of $15.00 per hour. (1) Calculate the following production variances. Material price variance Material quantity variance Labour price variance Labour efficiency variance Variable overhead variance LINK TO TEXT LINK TO TEXT LINK TO TEST LINK TO TEXT LINK TO TEXT
