Dock Guard, which uses a standard cost accounting system, manufactured 200,000 boat fenders during the year, using 1,450,000 m of extruded vinyl purchased at $1.05 per metre. Production required 4,500 direct labour hours that cost $14 per hour. The materials standard was 7 m of vinyl per fender at a standard cost of $1.10 per metre. The labour standard was 0.025 direct labour hour per fender at a standard cost of $13 per hour. Compute the price and efficiency variances for direct materials and direct labour. Does the pattern of variances suggest that Dock Guard’s managers have been making trade-offs? Explain.

  • CreatedApril 30, 2015
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