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: Direct material:

Quantity, .25 hour Quantity, 4 kilograms

Rate, $16 per hour Price, $.80 per kilogram

Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs

incurred in the production of 50,000 units were as follows:

Direct labor: $211,900 for 13,000 hours

Direct material: $170,100 for 210,000 kilograms

1. Use the variance formulas to compute the direct-material price and quantity variances, the directmaterial

purchase price variance, and the direct-labor rate and efficiency variances. Indicate

whether each variance is favorable or unfavorable.

2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show

how the solution will change if the following information changes: the standard direct-labor rate is

$15 per hour, and the standard direct-material price is $.79 per kilogram.