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Calculate the flexible budget variances for direct materials

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Reference no: EM132800777

Question - Baker Industries is a manufacturer of Craft Beer. For November 2020, Baker had budgeted the following amounts for one unit (Keg) of its most popular product Caper:

Direct Material 14 litres @ $3.25 per litre

Direct Labour 3.5 hours @ $21 per hour

Actual data for the month of November was as follows:

Budgeted output of Caper 2,500 units

Actual output of Caper 2,400 units

Litres purchased and used 34,800 litres, total cost $107,880

 Total labour costs, $178,450

Actual hours used 8,600 hours.

Required -

1. Calculate the Flexible Budget variances for

a. Direct Materials

b. Direct Labour

2. Calculate the Price and Rate Variances for

a. Direct Materials

b. Direct Labour

3. Comment on the results.

Reference no: EM132800777

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