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Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by
Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.13 hour Rate, $6.50 per hour Direct Material: Quantity, 6 kilograms Price, $0.36 per kilogram Actual material purchases amounted to 112,000 kilograms at $0.400 per kilogram. Actual costs incurred in the production of 16,000 units were as follows: Direct labor: Direct material: $16,200 for 2,400 hours $40,000 for 100,000 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) $ Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance 4.000 Unfavorable Unfavorable Unfavorable Unfavorable Unfavorable During June, Danby Company's material purchases amounted to 6,900 pounds at a price of $7.70 per pound. Actual costs incurred in the production of 1,500 units were as follows: Direct labor : Direct material: $120,520 ($18.40 per hour) $ 35, 420 ($7.70 per pound) The standards for one unit of Danby Company's product are as follows: Direct Labor: Quantity 4 hours per unit Rate, $18.30 per hour Direct Material: Quantity, 3 pounds per unit Price, $7.40 per pound Required: Compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) | $ | $ Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance 1,380 Unfavorable 740 Unfavorable Unfavorable Unfavorable Unfavorable
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