Question: Great Guard which uses a standard cost accounting system manufactured
Great Guard, which uses a standard cost accounting system, manufactured 210,000 boat fenders during the year, using 1,730,000 m of extruded vinyl purchased at $1.45 per metre. Production required 4,500 direct labour hours that cost $14.50 per hour. The materials standard was 8 m of vinyl per fender at a standard cost of $1.60 per metre. The labour standard was 0.023 direct labour hour per fender, at a standard cost of $13.00 per hour. Compute the price and efficiency variances for direct materials and direct labour. Does the pattern of variances suggest that Great Guard’s managers have been making trade-offs? Explain.
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