u ullu sladard prices 0-488 Calculate materials and labour variances (Learning O
ID: 2555510 • Letter: U
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u ullu sladard prices 0-488 Calculate materials and labour variances (Learning Objective 4) Curly's manufactures the bags of frozen french fries used at its franchised restaurants Last week, Curly's purchased and used 99,000 kg of potatoes at a price of $0.70 per klogram. During the week, 2,300 direct labour hours were incurred in the plant at a rate of $12.30 per hour. The standard price per kilogram of potatoes is $0.90, and the standard direct labour rate is $12.05 per hour. Standards indicate that for the number of bags of frozen fr of direct labour. es produced, the factory should have used 97,000 kg of potatoes and 2,200 hours Requirements Check s efficienc variance as favourable or unfavourable. ancee direct materials price and efficiency variances. Be sure to label eacth mine the direct labour price and efficiency variances. Be sure to label each driance as favourable or unfavourable. k of a plausible explanation for the variances found in Requirement 1. 4. Could the Expainxlanation for the labour variances be tied to the material variances?Explanation / Answer
1.
2. The materials price variance is favorable due to the actual price of potatoes being lower than the standard price. This could be due to potatoes of inferior quality being purchased at lower price which in turn resulted in higher usage of potatoes leading to an unfavorable material efficiency variance.
3.
4. The unfavorable labor efficiency variance could be tied to the unfavorable materials efficiency variance. Since material usage was more, causing an unfavorable materials efficiency variance, the labor required was also more resulting in unfavorable labor efficiency variance.
Direct material variances Direct materials price variance $19800 Favorable AQ x (AR - SR) = 99000 x ($0.70 - $0.90) = 99000 x -$0.20 = -$19800 Direct materials efficiency variance $1800 Unfavorable SR x (AQ - SQ) = $0.90 x (99000 - 97000) = $0.90 x 2000 = $1800 SQ = 51100 shirts x 1.50 yards = 76650 yardsRelated Questions
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