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Smarty Pants Company makes a product called S. The standard cost card for one unit of S follows: Direct Material 2 kgs. @ 10/kg. $20
Smarty Pants Company makes a product called "S". The standard cost card for one unit of "S" follows:
Direct Material 2 kgs. @ 10/kg. $20
Direct Labour 3 hours @ $30/hr. $90
Total DM and DL $110 per unit
Budgeted production in the period 200 units
Actual results in the period:
Actual units produced 111 units
Direct Material 240 kgs. used $3,000 total
Direct Labour 320 hours $11,200 total
Required:
- Calculate the direct materials price variance and the direct materials efficiency/quantity variance. And Indicate if each variance is Favourable or Unfavourable. Show all your work.
- Calculate the direct labour price variance and the direct labour efficiency variance. Identify if each variance is Favourable or Unfavourable. Show your work.
- The boss was really happy because the total actual costs for materials and labour were lower than budgeted costs (i.e. $22,000). How would you respond to the boss. Be as brief as possible.
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