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Topic: Variance analysis Patio Corp manufactures residential home decks. The company has budgeted the production of 15 home decks in the period. Standard prices
Topic: Variance analysis Patio Corp manufactures residential home decks. The company has budgeted the production of 15 home decks in the period. Standard prices for materials (pine wood) and labour are as follows: $18 per metre for pine wood and $30 per hour for direct labour. Each deck was expected to use 31 hours of direct labour and 160 metres of pine wood. During July, Patio Corp built 11 decks, using total 2160 metres of pine wood and 300 direct labour hours. The actual price for pine wood and labour are as follows: $14 per meter for pine wood and $24 per hour for direct labour. Required: Compute: 1. The standard cost of completing one deck. (Assume every deck built is identical.) 2. The direct materials price variance; Be sure to label each variance is favorable (F) or unfavorable (U). 3. The direct materials quantity/efficiency variance; 4. The direct labour price variance; 5. The direct labour efficiency variance. 6. After having seen the calculations of the variances, the company's manager is excited by the results. But the manager was confused because members of the sales team were getting customer complaints. Comment briefly. Should the manager be excited? Explain very briefly. Use point form. Do not worry about grammar.
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