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Gardenia Ltd produces and sells ceramic plant pots. Gardenia Ltd had the following standards for one type of its products for May 2022:
| | Standard per pot |
| Direct materials | 2 kilograms | $10 per kilogram |
| Direct manufacturing labour | 0.5 hour | $15 per hour |
The following information about the actual performance during June 2018 was as follows:
- Actual output units (pot) produced, 1 800
- Direct materials purchased and used 3 780 kilograms at a price of $10.35 per kilogram
- Actual direct manufacturing labour costs, $13 365
- Actual hours of direct labour used were 810 hours.
Required (show your workings):
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| Calculate favourable or unfavourable price variance for direct materials | 3 marks |
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| Calculate favourable or unfavourable efficiency variance for direct materials | 3 marks |
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| Calculate favourable or unfavourable rate (price) variance for direct labour | 3 marks |
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| Calculate favourable or unfavourable efficiency variance for direct labour | 3 marks |
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| Give explanation for the variance occurred for direct material variances | 3 marks |
Answer & Explanation
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