Reference no: EM133151298
Question - My Tea Brew Ltd. is located in Toronto, Ontario. The company produces small batch, handcrafted tea blends and infusions using the best quality teas and all natural ingredients. The company uses a standard costing system, with the standard variable and fixed manufacturing cost per tea box details shown below:
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Standard Quantity/Hour
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Standard Price/Rate
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Direct materials
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0.18 kilograms
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$42.40 per kilogram
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Direct labour
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0.40 hours
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$28.50 per hour
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Variable manufacturing overhead
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0.25 hours
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$5.40 per hour
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Fixed manufacturing overhead
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0.50 hours
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$1.20 per hour
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During February 2021, the company produced 783 tea boxes and incurred the following costs:
- Purchased and used 118 kilograms of raw materials at a cost of $43.00 per kilogram. There were no raw materials in inventory at the beginning of the month.
- Worked 315 direct labour hours at a cost of $29.20 per hour.
- Incurred total variable manufacturing overhead costs $1,100 and fixed manufacturing overhead costs $450.
Required -
(a) Compute the direct labour rate and efficiency variances.
(b) Compute the total overhead variance.
(c) Compute the direct material price and quantity variances.