Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Kohler Chemical Manufacturing Company produces two primary chemical products to be used as base ingredients for a variety of products. The 2016 budget for

The Kohler Chemical Manufacturing Company produces two primary chemical products to be used as base ingredients for a variety of products. The 2016 budget for the two products (in thousands) was as follows:

LX-4 ABC-8 Total
Level of production in litres 1,800 1,800 3,600
Direct materials $4,500 $5,625 $10,125
Direct labour 2,700 2,700 5,400
Total direct manufacturing cost $7,200 $8,325 $15,525

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 2016 were as follows (in thousands):

LX-4 ABC-8 Total
Total litres produced 1,710 1,974 3,684
Direct materials $4,104.00 $6,415.50 $10,519.50
Direct labour 2,808.00 3,276.00 6,084.00
Total direct manufacturing cost $6,912.00 $9,691.50 $16,603.50

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 LX-4: (1) the direct materials price variance, and (2) the direct materials efficiency (yield) variance. (Round answers to the nearest whole dollar, e.g. 5,275.)
(1) The direct materials price variance $

(2) The direct materials efficiency (yield) variance $

Calculate for product ABC-8: (1) the direct labour rate variance, and (2) the direct labour efficiency variance. (Round answers to the nearest whole dollar, e.g. 5,275.)
(1) The direct labour rate variance $

(2) The direct labour efficiency variance $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Health Care Marketing Audit A Complete Guide

Authors: Gerardus Blokdyk

2020 Edition

0655947469, 978-0655947462

More Books

Students also viewed these Accounting questions

Question

Describe the prosecutorial process from arrest to conviction.

Answered: 1 week ago

Question

How We Listen?

Answered: 1 week ago