Reference no: EM132538825

Question - ABC Corporation is producing 55 metal barrels to store oil. The main materials used are steel and plastic. The budgeted information for direct materials and direct manufacturing labor for April 2019 were as follows:

Barrels produced 5,200

Direct materials per sq.m.

Steel $3

Plastic $1.5

Direct material per unit

Steel (sq.m.) 20

Plastic (sq.m.) 7

Direct labour hours per unit 2.3

Direct labour cot per hour $12

The actual number of barrels produced was 4,920. The actual cost of steel and plastic was $283,023 (95,940 sq. ft.) and $50,184 (33,456 sq. ft.), respectively. The actual direct labor cost incurred was $118,572 (9,840 hours). There were no beginning or ending inventories of materials.

Required - Compute the following variances. Comment on the variances, with particular attention to the variances that may be related to each other and the controllability of each variance:

1. Selling-price variance.

2. Direct materials price variance.

3. Direct materials efficiency variance.

4. Direct manufacturing labor efficiency variance.