Solution-Compute the materials price and usage variances

Compute the materials price and usage variances

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Reference no: EM132804531

Question - J & H Motor produces 6.5 horsepower motors for lawn mowers.

The plant uses a standard costing system for production costing and control. The standard cost sheet for the sub-assembly follows:

Direct materials (3 kilograms @ $10) $ 30.00

Direct labour (1.6 hours @ $18) 28.00

During the year, J & H Motor had the following actual production activity:

-Production of 50 000 motors.

-A total of 130 000 kilograms of raw materials was purchased at $9.40 per kilogram.

-There were 30 000 kilograms of raw materials in beginning inventory. There was no ending inventory.

-The company used 82 000 direct labour hours at a total cost of $1 599 000.

Required -

1. Compute the materials price and usage variances. Of the two materials variances, which is viewed as the most controllable? To whom would you assign responsibility for the usage variance in this case? Explain.

2. Compute the labour rate and efficiency variances. Who is usually responsible for the labour efficiency variance? What are some possible causes for this variance?

Reference no: EM132804531

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Compute the materials price and usage variances

Reference no: EM132804531

Reference no: EM132804531

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