Question

Othello Corporation provides the following standard costing data for May: Direct materials 4.5 litres at $12...

Othello Corporation provides the following standard costing data for May:
Direct materials 4.5 litres at $12 per litre
Direct labour 1.25 hours at $28 per hour
Variable overhead 1.25 hours at $7 per hour


For the month of May, Othello Corporation produced 840 units of finished goods. A total of 4,950 litres of raw materials were purchased for a total cost of $54,450. 4,368 litres of raw materials were actually used in production with the other 582 litres still being in inventory at the end of the month. 1,092 hours of direct labour were worked at a total cost of $29,484. Actual variable manufacturing overhead costs for the month were $8,060.

  1. Compute the following variances for May. Show calculations for full marks.


  1. Direct materials price and quantity variance
  1. Direct labour rate and efficiency variance
  1. Variable overhead spending and efficiency variance
  1. Provide possible causes for the Direct Labour rate and efficiency variances
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