My Tea Brew Ltd. is located in Toronto, Ontario. The company produces small batch, handcrafted tea...

 

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My Tea Brew Ltd. is located in Toronto, Ontario. The company produces small batch, handcrafted tea blends and infusions using the best quality teas and all natural ingredients. The company uses a standard costing system, with the standard variable and fixed manufacturing cost per tea box details shown below: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Standard Quantity/Hour 0.18 kilograms 0.40 hours 0.25 hours 0.50 hours Standard Price/Rate $42.40 per kilogram $28.50 per hour $5.40 per hour $1.20 per hour During February 2021, the company produced 783 tea boxes and incurred the following costs: - Purchased and used 118 kilograms of raw materials at a cost of $43.00 per kilogram. There were no raw materials in inventory at the beginning of the month. - Worked 315 direct labour hours at a cost of $29.20 per hour. - Incurred total variable manufacturing overhead costs $1,100 and fixed manufacturing overhead costs $450. Instructions (a) Compute the direct labour rate and efficiency variances. (4 marks) (b) Compute the total overhead variance. (2 marks) (c) Compute the direct material price and quantity variances. (4 marks) My Tea Brew Ltd. is located in Toronto, Ontario. The company produces small batch, handcrafted tea blends and infusions using the best quality teas and all natural ingredients. The company uses a standard costing system, with the standard variable and fixed manufacturing cost per tea box details shown below: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Standard Quantity/Hour 0.18 kilograms 0.40 hours 0.25 hours 0.50 hours Standard Price/Rate $42.40 per kilogram $28.50 per hour $5.40 per hour $1.20 per hour During February 2021, the company produced 783 tea boxes and incurred the following costs: - Purchased and used 118 kilograms of raw materials at a cost of $43.00 per kilogram. There were no raw materials in inventory at the beginning of the month. - Worked 315 direct labour hours at a cost of $29.20 per hour. - Incurred total variable manufacturing overhead costs $1,100 and fixed manufacturing overhead costs $450. Instructions (a) Compute the direct labour rate and efficiency variances. (4 marks) (b) Compute the total overhead variance. (2 marks) (c) Compute the direct material price and quantity variances. (4 marks)

Answer rating: 100% (QA)

To compute the direct labor rate and efficiency variances total overhead variance and direct material price and quantity variances well use the standard costing formulas Lets calculate each variance s... View the full answer