On May 1, 2018, Terra Company began the manufacture of a new internet paging device known as Flare. The company installed a standard costing system to account for manufacturing costs. The standard costs for a unit of Flare are as follows:

Direct materials (3 kg at $5/kg) ............................................................................ $15.00
Direct manufacturing labour (0.5 hours at $20 per hour} ................................. 10.00
Manufacturing overhead (75% of direct manufacturing labour costs} .............. 7.50
                                                                                                                                       $32.50

The following data were obtained from Terra's records for the month of May:

Actual production in May was 4,000 units of Flare, and actual sales in May were 2,500 units. The amount shown for direct materials price variance applies to materials purchased during May. There was no beginning inventory of materials on May 1, 2018.

Required
Compute each of the following items for Terra for the month of May. Show your computations.

1. Standard direct manufacturing labour-hours (DMLH) allowed for actual output achieved.

2. Actual direct manufacturing labour-hours (DMLH) worked.

3. Actual direct manufacturing labour wage rate.

4. Standard quantity of direct materials allowed (in kilograms).

5. Actual quantity of direct materials used (in kilograms).

6. Actual quantity of direct materials purchased (in kilograms).

7. Actual direct mate rials rate per kilograms.

Transcribed Image Text:

Debit Credit Revenues $125,000 Accounts payable control (for May's purchases of direct materials) Direct materials rate variance Direct materials efficiency variance Direct manufacturing labour rate variance Direct manufacturing labour efficiency variance 68,250 $3,250 2,500 1,900 2,000