Reference no: EM132813216

Topline Surf Boards manufactures a single product. The standard cost of one unit of this product is as follows:

Direct materials: 2 metres at $3 per metre $6.00

Direct labour: 1 hour at $4.50 per hour 4.50

Variable manufacturing overhead: 1 hour at $3 per hour 3.00

Fixed manufacturing overhead: 1 hour at $5 per hour 5.00

Total standard variable cost per unit $18.50

During October, 6,000 units were produced. Selected data relating to the month's production follow:

Materials purchased: 20,000 metres at $2.85 per metre $57,000

Materials used in production: 12,650 metres ---

Direct labour: ? hours at $ ? per hour $27,950

Variable manufacturing overhead cost incurred $20,475

Variable manufacturing overhead efficiency variance $1,500 U

Denominator level of activity for October 6,200 hours

Fixed manufacturing overhead budget variance 1,000 U

There was no beginning inventory of raw materials. The variable and fixed manufacturing overhead rates are based on direct labour-hours.

Required:

1. For direct materials:

Problem a. Compute the price and quantity variances for October.