-) (Dezto.mheducation.com/hm.tpx -Apps https://wwww.rnacewa Clarissa McWhirter,

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-) (Dezto.mheducation.com/hm.tpx -Apps https://wwww.rnacewa Clarissa McWhirter, vice president of Cyprus Company, was pleased to see a small variance on the income statement after the trouble the company had been having in controlling the S17385 overall manufacturing variance reported last period was well below the 3% lin t that had been set for variances. The company produces and sells a single product. The standard cost card for the product follows costs. She noted that Direct materials, 4 metres at $2 50 per metre Direct labour, 1.5 direct labour-hours at $9 5 per direct labour-hour Variable overhead, 1.5 direct labour-hours at $2.6 per direct labour-hour Fixed overhead, 1.5 direct labour-hours at $5 per direct labour-hour $10.00 14.25 3.90 7.50 Standard cost per unit $35.65 The following additional information is available for the year just completed manufactured 20,000 units of product during the year a. The b. A total of 79,050 metres of material was purchased during the year at a cost o f $2.70 per metre All of this material was used to manufacture the 20,000 units. There were no beginning or ending inventories for the year. c. The company worked 31,000 direct labour-hours during the year at a cost of $9 40 per hour d. Overhead cost is applied to products on the basis of standard direct labour-hours. Data relating to manufacturing overhead costs follow Denominator activity level (direct labour-hours) Budgeted fixed overhead costs (from the flexible budget) Actual fixed overhead costs Actual variable overhead costs 29,000 $ 145,000 S 143,300 82,250 Required: 1. Compute the direct materials price and quantity variances for the year (Indicate the effect of each up

Explanation / Answer

Direct material price variance (Actual price - standard price)*AQ purhcased (2.70 - 2.50)*79,050 15810 U Direct materials Quantity variance (Actual Qty used - standard qty allowed)*standard price (79,050   - 20000*4)*2.5 2375 F

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