EFG Ltd . produces plastic chairs for kindergarten. EFG uses a standard cost system. During January 2
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Question:
EFG Ltd produces plastic chairs for kindergarten. EFG uses a standard cost system. During January EFG used plates for manufacturing, costing $ EFG paid direct labor costs $ for hours of direct labor. The standard cost per chair assumes plate per chair at $ per plate, and hours of direct labor per chair at $ per hour. The budgeted quantity of products for January were chairs, while the actual quantity was
a Calculate the price variance and quantity variance relating to direct materials used in the manufacture of chairs in January
b Calculate the wage rate variance and direct labor efficiency for January
c Assume that EFG specifies of budgets as the thresholds for variances, identify which adverse variances calculated are above the threshold and should be analyzed? Specify possible causes and recommend corrective actions for improvement?
Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
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