Comment on the price and usage variance

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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: 20000
b. 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.

Reference no: EM132753880

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