Question
Walcott Ltd produced 7800 widgets. The accounting records indicated the following: Direct material purchased 25 000 kilograms @ $2.60 per kilogram Direct material used 23
Walcott Ltd produced 7800 widgets. The accounting records indicated the following:
Direct material purchased 25 000 kilograms @ $2.60 per kilogram
Direct material used 23 100 kilograms
Direct labour used 40 100 hours @ $18 per hour
The widget has the following standard prime costs:
Direct material: 3 kilograms @ $2.50per kilogram
Direct labour hours: 5 hours @ $17 per hour
Required:
A)Fill in the cells to calculate direct material and labour variances identifying the direct material price and quantity variances and the direct labour rate and efficiency variances separately.(11 marks)
B)Suggest at least one possible reason to explain each variance(4 marks)
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