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Question - Kenso Ltd is a surfcraft manufacturer. For August, Kenso Ltd had the following standards for one of its products, a surfski: Standards per surfski Direct materials 3 kilograms of input at $5.50 per kilogram Direct manufacturing labour 0.5 hour of input at $10.50 per hour The following data were compiled regarding actual performance: actual output units (surfskis) 2 200 units; kilograms of input purchased and used, 6 200; price per kilogram, $5.67; direct manufacturing labour costs, $9 844; actual hours of input, 920; and labour price per hour, $10.70.
Required -
1. Show calculations of price and efficiency variances for direct materials and direct labour. Give a plausible explanation of why each variance occurred.
2. Discuss two importance of standard costing.
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