Markman Industries employs a standard cost system. It has established the following standards for the prime costs
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Question:
Markman Industries employs a standard cost system. It has established the following standards for the prime costs of its air rifle product line:
Standard quantity | Standard price | Standard cost | |
Direct materials | 4 kg | $21.80/kg | $ 87.20 |
| 0.5 direct labour hours (DLH) |
|
|
$ 91.20 |
During November, Markman purchased 13,000 kg of direct materials at a total cost of $295,100. The total factory wages for November were $38,000, 90% of which were for direct labour.
Markman manufactured 3,500 air rifles during November, using 13,500 kg of direct materials and 1,900 direct labour hours.
Required:
- What was the direct materials purchase price variance for November?
- What was the direct materials quantity variance for November?
- What was the direct labour rate variance for November?
- What was the direct labour efficiency variance for November?
- Over the past year, Markman’s management team attempted to reduce the number of customer complaints relating to the product by sourcing higher-quality direct materials from a different supplier. Explain the effect this has had on the direct material variances. Do you believe this has also impacted the direct labour variances? Explain.
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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