Question
The Bridgeport Chemical Manufacturing Company produces two primary chemical products to be used as base ingredients for a variety of products. The 2022 budget for
The Bridgeport Chemical Manufacturing Company produces two primary chemical products to be used as base ingredients for a variety of products. The 2022 budget for the two products (in thousands) was as follows:
LX-4 | ABC-8 | Total | ||||
---|---|---|---|---|---|---|
Level of production in litres | 2,200 | 2,200 | 4,400 | |||
Direct materials | $5,500 | $6,900 | $12,400 | |||
Direct labour | 3,300 | 3,300 | 6,600 | |||
Total direct manufacturing cost | $8,800 | $10,200 | $19,000 |
The following planning assumptions were used for the budget: (1) a direct materials yield of 96%, and (2) a direct labour rate of $6 per hour. The actual results for 2022 were as follows (in thousands):
LX-4 | ABC-8 | Total | ||||
---|---|---|---|---|---|---|
Total litres produced | 2,090 | 2,410 | 4,500 | |||
Direct materials | $5,016.00 | $7,870.00 | $12,886.00 | |||
Direct labour | 3,465.00 | 4,290.00 | 7,755.00 | |||
Total direct manufacturing cost | $8,481.00 | $12,160.00 | $20,641.00 |
The actual production yield was 95% for LX-4 and 94% for ABC-8. The direct labour cost per hour for both products was $6.50.
Calculate for product ABC-8: (1) the direct labour rate variance, and (2) the direct labour efficiency variance. (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answers to 0 decimal places, e.g. 5,275. Enter answers in thousands.)
(1) | The direct labour rate variance | $enter a dollar amount | select an option FavourableUnfavourableNeither favourable nor unfavourable | ||
---|---|---|---|---|---|
(2) | The direct labour efficiency variance | $enter a dollar amount | select an option Neither favourable nor unfavourableFavourableUnfavourable |
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