Question

Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production- engineering staff and the controller.
Direct labor: Direct material:
Quantity, .25 hour ..... Quantity, 4 kilograms
Rate, $ 12 per hour .... Price, $.60 per kilogram
Actual material purchases amounted to 240,000 kilograms at $.62 per kilogram. Actual costs incurred in the production of 50,000 units were as follows:
Direct labor: ..... $ 158,600 for 13,000 hours
Direct material: ... $ 130,200 for 210,000 kilograms

Required:
1. Use the variance formulas to compute the direct-material price and quantity variances, the direct material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
2. Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: the standard direct- labor rate is $ 14 per hour, and the standard direct- material price is $.59 per kilogram.



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  • CreatedApril 22, 2014
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