CHAPTER TEN STANDARD COSTS FOR CONTROL: DIRECT MATERIAL AND DIRECT LABOUR 511 3. Construct an Excel spreadsheet to solve requirements 1 and 2. Demonstrate how the solution will change if the following information changes: the standard direct labour rate is $40 per hour and the standard direct material price is $3 per kilogram. P10.32 Direct material variances; journal entries: service firm LO10.5 Rural Support Ltd has been successful in gaining a major contract to prepare and deliver meals to elderly and 10.11 disabled people who reside in Windsor. These operations were previously managed by the Windsor Council, and the services were outsourced by the council as a cost-saving measure. Rural Support tendered a low price, so it is very focused on cost control. The following standard prices have been established for some major food ingredients: Lamb roast Fish fillets Chips Mixed vegies Standard price $16 per kilogram $24 per kilogram $12 per kilogram $10 per kilogram Rural Support purchases the prepared food frozen in 10 kilogram containers, and kitchen staff produce a range of standard meals. Two popular meals are the lamb dinner and the fish dinner. The standard quantities used in these two meals are as follows: Lamb dinner Lamb roast 200 grams 250 grams Chips 150 grams Mixed vegies Fish dinner Fish fillets Chips 350 grams 300 grams During March, the company produced 500 lamb dinners and 800 fish dinners. Purchase and usage data for the major material ingredients during March follow: Lamb roast Fish fillets Chips Mixed vegies Required: Purchases in March Used in production Qty (kg) $ per kg (kg) 250 16.80 105 170 25.20 300 300 10.00 320 200 10.80 120 1. Calculate the total direct material quantity variance and price variances for March. 2. Prepare journal entries to record the purchase of material, use of material and incurrence of variances in March.