Reference no: EM133076167
Question - Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson uses the following standards for one unit of product.
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Standard Quantity
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Standard Price or Rate
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Direct Materials
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5 pounds
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$3.60 per pound
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Direct Labor
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1.25 Hours
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$12.00 per Hour
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In November 2021, Jackson purchased 125,000 pounds of direct material at a total cost of $475,000. The total factory wages for November were $364,000 and worked 28,000 direct labor hours. The company manufactured 22,000 units of product during May using 108,000 pounds of direct materials.
Required -
A) Compute the cost that should be incurred for the production of 15,000 units.
B) Calculate the material price variance and the material usage variance and label them as either "favourable" or "unfavourable".
C) Calculate the Direct Labor Rate variance and the Efficiency variance and label them as either "favourable" or "unfavourable".
D) If you were to investigate these variances, whom would you first suspect is not doing their job (i.e., Purchasing Manager or Production Manager) and why?
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