Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12...

 

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Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.12 hour Rate, $6.00 per hour Direct Material: Quantity, 5 kilograms Price, $0.34 per kilogram Actual material purchases amounted to 81,200 kilograms at $0.375 per kilogram. Actual costs incurred in the production of 14,000 units were as follows: Direct labor: Direct material: $11,284 for 1,820 hours $27,300 for 72,800 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.12 hour Rate, $6.00 per hour Direct Material: Quantity, 5 kilograms Price, $0.34 per kilogram Actual material purchases amounted to 81,200 kilograms at $0.375 per kilogram. Actual costs incurred in the production of 14,000 units were as follows: Direct labor: Direct material: $11,284 for 1,820 hours $27,300 for 72,800 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).)