# Given below are actual costs of Rubik Corporation, a plastic bottle manufacturing company, for the first quarter of the current

## Question:

Given below are actual costs of Rubik Corporation, a plastic bottle manufacturing company, for the first quarter of the current year. Rubik Corporation sells its bottles in packs of 24.

Given below is additional information for the first quarter:

• The standard quantity of raw material to be used in one unit of plastic bottles (pack of 24) is 1.5 kg.

• The actual cost incurred to purchase one kg of raw material is £7.00.

• The actual wage rate is £8.00 for one hour of work.

• The actual time taken to manufacture one unit of plastic bottles (pack of 24) is 0.75 hours, whereas the standard time is 0.50 hours per unit.

• The standard variable manufacturing overhead rate is £4.50 per direct labour hour.

• There were no beginning inventories and ending inventories for the first quarter.

**Required**

1. Explain what materials price variance and materials quantity variance measure. Also, provide the formula to calculate materials price variance and materials quantity variance.

2. Using the variance formulae, determine the following for the first quarter.

a. Standard price per kg of raw material.

b. Total standard quantity of materials to be used in the first quarter.

c. Actual number of direct labour hours worked.

d. Standard rate of pay per direct labour hour.

e. Total standard hours of production in the first quarter.

f. Actual number of units manufactured.

3. Using the data calculated in Requirement 2 and any other calculations that may be required, calculate the standard cost for one unit of plastic bottles (pack of 24).

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**Related Book For**

## Management Accounting

**ISBN:** 9780077185534

6th Edition

**Authors:** Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen

**Question Details**

**12**- Standard Costs and Variance Analysis

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