April, 2018 The following per unit standard cost data are for Dixon Ltd for Janu

Question

April, 2018 The following per unit standard cost data are for Dixon Ltd for January, 2008 sta Direct Material 30 kilograms at $10 per kilogram Direct Labour hours at $24 per hour During January, Dixon produced 720 units of output. Direct materials purchased and used were 21,000 kg at $10.5 per kilogram. Direct Labour used was 5800 hours at $24.5 per hour Required: 1. What were the rate and efficiency variances for direct labour. Please briefly explain what are the reasons causing variance respectively 2 What were the price and quantity variances for direct material. Please briefly explain what are the reasons causing variance respectively

Explanation / Answer

1) Direct labor rate variance (Actual rate - standard rate)*Actual hours (24.5-24)*5,800 2900 U direct labor Efficiency varaince (Actual hours - standard hours)*standard rate (5,800   - 720*8)*24 960 U the reason for variance is -actual hours used is more than the standard hours allowed and actual rate of labor is also more than the standard 2) Material price variance (Actual price - standard price)*AQ (10.5-10)*21000 10500 U material quantity variance (AQ - SQ)*standard rate (21,000    - 720*30)*10 6000 F the reason of variance is the excess price paid for purchasing the materials

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