Question

Mike Manufacturing has the following standard cost sheet for one of its products: Direct materials (6...

Mike Manufacturing has the following standard cost sheet for one of its products:

Direct materials (6 ft. @ $5)

$30

Direct labour (1.5 hours @$10)

15

Variable overhead (1.5 hours@ $4)

6

Fixed overhead (1.5 hours@ $2*)

3

Standard unit cost

54


The rate based on expected activity of 17,000 hours.

During the most recent year, the following actual results were recorded:

Production

12,000 units

Fixed overhead

$33,000

Variable overhead

$69,000

Direct materials (71,750 ft. purchased)

$361,620

Direct labour (17,900 hours)

$182,580

Required:

I.  Calculate direct materials price variance ($)

II.  Calculate direct Labour efficiency variances ($)

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