Reference no: EM132540238

Point 1: Swansea Company is a manufacturer of dining table and the main customers consist of hotels and Italian style restaurants. Previously, the company was regarded as a market leader in this kind of industry. However, at the start of this year, a few competitors entered into this industry and apparently, Swansea's market share has declined sharply.

Point 2: Swansea's management has asked you to evaluate certain aspects of company's performance.

Point 3: As a cost accountant, you have to compute several kinds of variances for performance evaluation purposes. Accordingly, you have to make meaningful comparisons of actual results with planned performance, and to obtain insights into why actual results differ from the planned performance based on the following information:

The production of a dining table requires the following resources:

1. Direct materials standard 2 kilograms at $54 per kilogram
2. Direct manufacturing labor standard 1.5 hours at $72 per hour

During last period, the company made 3,000 tables and used 6,300 kilograms of wood materials costing $315,000. Besides, 4,200 direct labor hours were used for the cost of $319,200.

Required:

Question a. Compute the direct materials price variance for the last period.

Question b. Compute the direct materials efficiency variance for the last period.

Question c. Compute the direct manufacturing labor rate variance for the last period.

Question d. Compute the direct manufacturing labor efficiency variance for the last period.

Question e. Explain the relationship between the direct labor rate variance and the direct labor efficiency variance in this case.