Refer to the data in Exercise 10.23. Calculate the pure rate variance and joint rate efficiency variance for direct labour. Draw a graph of the direct labour variances similar to the graph in Exhibit 10.11
Refer to data in exercise 10.23
During June, Andrew Ltd’s material purchases amounted to 6500 kilograms at a price of $8 per kilogram. Actual costs incurred in the production of 2000 units were as follows:
Direct labour ………………………. $177 375……………….. ($27.50 per hour)
Direct material …………………….. $34 400 ………………… ($8 per kilogram)
The standards for one unit of Henderson’s product are as follows:
Direct labour ___________________________ Direct material
Quantity: 3 hours per unit ……………………. Quantity: 2 kilograms per unit
Rate: $27 per hour ………………………………… Price: 87.50 per kilogram
Required:
1. Calculate the direct material price and quantity variances and the direct labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable.
2. Draw diagrams depicting the direct material and direct labour variances, similar to the diagrams in Exhibits 10.3 and 10.5.
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