Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2019, AII estimated...

 

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Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2019, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Direct materials Direct labor - Budgeted quantity 1.60 pounds 0.70 hours During June, Heavy Products produced and sold 1,500 containers using 2,850 pounds of direct materials (assuming same purchase and usage of the direct materials) at an average cost per pound of $57 and 1,200 direct manufacturing labor-hours at an average wage of $23.50 per hour. Required: a. For the month of June, please determine the following: (14 marks) direct materials flexible budget variance - Budgeted price $60 per pound $20 per hour direct materials price variance direct materials efficiency variance direct labor flexible budget variance direct labor price (or rate) variance direct labor efficiency variance b. What are the possible reasons for the favorable or unfavorable direct material efficiency variance calculated above? (6 marks) Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2019, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Direct materials Direct labor - Budgeted quantity 1.60 pounds 0.70 hours During June, Heavy Products produced and sold 1,500 containers using 2,850 pounds of direct materials (assuming same purchase and usage of the direct materials) at an average cost per pound of $57 and 1,200 direct manufacturing labor-hours at an average wage of $23.50 per hour. Required: a. For the month of June, please determine the following: (14 marks) direct materials flexible budget variance - Budgeted price $60 per pound $20 per hour direct materials price variance direct materials efficiency variance direct labor flexible budget variance direct labor price (or rate) variance direct labor efficiency variance b. What are the possible reasons for the favorable or unfavorable direct material efficiency variance calculated above? (6 marks)

Answer rating: 100% (QA)

a Direct Materials Flexible Budget Variance Actual quantity of direct materials used 2850 lbs Standard quantity of direct materials used 160 lbs x 1500 containers 2400 lbs Flexible budget variance Act... View the full answer