Exercise 10-10 Material Variances [LO2] The direct materials and direct labour standards for one bottle...
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Exercise 10-10 Material Variances [LO2] The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below: During the most recent month, the following activity was recorded: a. 20,000 millilitres of material was purchased at a cost of $0.25 per millilitre. b. All of the material was used to produce 3,000 bottles of Clean-All. c. 625 hours of direct labour time was recorded at a total labour cost of $10,000. Assume that instead of producing 3,000 bottles of Clean-All during the month, the company produced only 2,000 bottles, using 16,000 millilitres of material. (The rest of the material purchased remained in raw materials inventory.) Required: Compute the direct materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
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