Question 5:

Superlight Limited has the following standard information for its single product:

Quantity Standard

Price Standard

Material

7 kilogram per unit

$1.50 per kilogram

Labour

2.5 hours per unit

$20 per hour

In March, the company produced 6,000 units.Actual data associated with March's operations are as follows:

Materials purchased

19,000 kilograms at a cost of $26,100

Material used in production

51,000 kilograms

Labour used in production

14,500 hours at $23 per hour

Required:

1)Calculate the material price variance and material efficiency variance.

2)Calculate the labour price variance and labour efficiency variance.

3)Give one possible explanation for each of the 4 variances you calculated in parts 1) and 2) above. Hint: is the variance (un)favourable? Is there possibly a relationship between any of these variances?