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Thrill Games developed a new play station called T-RILL. Thrill Games has a standard cost system to help control its costs. The following standards have
Thrill Games developed a new play station called T-RILL. Thrill Games has a standard cost system to help control its costs. The following standards have been established for T-RILL .Direct materials 15 grams per T-RILL . Standard direct material cost per T-RILL is $10 .Direct labour 1.4 hours per T-RILL Standard cost of direct labour is $14.40 per T-RILL. During October the company produced 6,500 T-RILL units. Production data for October are .Direct materials: 95,000 grams were purchased at a cost of $60,000; 5,000 grams of this was still in inventory at the end of the month. Direct labour: 9,000 direct labour hours were worked at a cost of $95,000. . Required: Compute the following variances for October: a) Direct materials price and quantity variances. (5 marks) b) Direct labour rate and efficiency variances. (5 marks) c) Are the variances computed in (a) and (b) linked? Provide a brief commentary on the variances computed above, including explanations regarding the price and the quantity, and the rate and the efficiency variances. (10 marks)
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