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Smith Ltd company produces apple juice sold in 4.5 litre bottles. Recently, the company adapted the following materials standard for a bottle of its apple juice.
Direct materials 3.6 kilogram @1.7= $6.48
During the first week of operation, the company experienced the following results:
a. Bottle units produced: 20000b. Kilograms of materials purchased:75 150 kilograms @$1.6.c. No beginning and ending of inventories of raw materials
Required:
Problem 1. Compute the materials price variance.
Problem 2. Compute the materials usage variance.
Problem 3. Comment on the price and usage variance.
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