Reference no: EM133175503

Question - MacDowell Company manufactures 100 kg bags of fertilizer that have the following unit standard costs for direct materials and direct labour:

Direct materials (100 kg @ $1.00 per kilogram) $100.00

Direct labour (0.5 hours at $24 per hour) 12.00

Total standard direct cost per 100 kg bag $112.00

The following activities were recorded for October:

1,000 bags were manufactured.

102,500 kg of materials costing $101,000 were purchased and used

$12,000 was paid for 475 hours of direct labour.

Required -

A. Compute the direct materials variances.

B. Compute the direct labour variances.

C. Give possible reasons for the occurrence of each of the preceding variances.