# Grand River Manufacturing produces a metal flange that it sells to several local home building supply retailers.

## Question:

Grand River Manufacturing produces a metal flange that it sells to several local home building supply retailers. The company has set standards as follows for materials and labour:

During the past month, the company purchased 1,500 kilograms of direct materials at a cost of $4,200. All of this material was used in the production of 840 units of product using 425 hours of direct labour. Direct labour cost totalled$4,675 for the month. The following variances have been computed:
Labour rate variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $425 U Total labour variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 375 F
Materials quantity variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$ 75 U
Required:
1. For direct labour:
a. Compute the standard rate per hour for labour.
b. Compute the standard quantity allowed for labour for the month €™s production.
c. Compute the standard quantity of labour allowed per unit of product.
2. For direct materials:
a. Compute the actual direct materials cost per kilogram for the month.
b. Compute the materials price variance.

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## Managerial Accounting

ISBN: 978-1259024900