STANDARD COSTING

Crystal Company produces glass jars. The unit for costing purposes is a case of 18 jars. The following standards for producing one case of jars have been established:

Direct materials (5 kg @ $0.80) $ 4

Direct labour (1.5 hours @ $16.00) 24

Standard prime cost $28

During December, 52,000 kilograms of material were purchased and used in production. There were 10,000 cases produced, with the following actual prime costs:

Direct materials $40,000

Direct labour 236,910 (for 14,900 hrs.)

Required:

1. Compute the materials variances.

2. Compute the labour variances.

3. What are the advantages and disadvantages that can result from the use of a standard costing system?