Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of

Question

Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Direct Material: Quantity, 7 kilogram:s Quantity, 0.28 hour Rate, $14.00 per Price, $0.66 per hour kilogram d to 340,400 kilograms at $0.690 per kilogram. Actual costs incurred in the production of 46,000 units were as follows: Direct labor $197,340 for 13,800 hours )litxliiGirariill: $.irni.Miinr32ejli()() Direct material: kilograms $225,354 for ,, Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance). Do not round intermediate calculations.) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance

Explanation / Answer

Direct material price variance= 225354-(326600*0.66)= $9798 Unfavorable Direct material quantityvariance= 0.66*(326600-46000*7)= $3036 Unfavorable Direct material purchase price variance= 340400*(0.69-0.66)= $10212 Unfavorable Direct labor rate variance= 197340-(13800*14)= $4140 Unfavorable Direct labor efficiency variance= 14*(13800-46000*0.28)= $12880 Unfavorable

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