Question

Exercise 10-23 Determination of Variances Using Diagrams (LO 10-3)

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:	Direct Material:
Quantity, 0.25 hour	Quantity, 4 kilograms
Rate, $16 per hour	Price, $0.80 per kilogram

Actual material purchases amounted to 240,000 kilograms at $0.81 per kilogram. Actual costs incurred in the production of 50,000 units were as follows:

Direct labor:	$211,900 for 13,000 hours
Direct material:	$170,100 for 210,000 kilograms

Required:

Fill in the amounts in the tables below.

Fill in the amounts in the tables below. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round "per kilogram" to 2 decimal place

Direct Material Price and Quantity Variances
Actual Material Cost			Projected material Cost			Standard Material Cost
Actual Quantity	x	Actual Price	Actual Quantity	x	Standard Price	Standard Quantity	x	Standard Price
	x			x			x
Kilograms used		Per kilogram	kilograms used		per kilogram	kilograms allowed		per kilogram
	equals =			equals =			equals=
			Unfavorable			Unfavorable
		Direct material price variance			Direct material quantity variance
					unfavorable
				Direct material variance

Answer 1