Grandma's Attic Company produces soft pillows made from goosedown. The company uses a standard cost system and has set thefollowing standards for materials and labour for each pillow:
Feathers from 5 large white geese (5 geese @ R5) R25
Fabric to make pillowcases (3 metres @ R2) R6
Direct labour (5 hours @ R8) R40
Total prime cost R71
During the month, the company produced 1000 goose down pillows.Actual geese purchased were 5100, at R4 per goose. Actual fabricpurchased was 2900 metres at R2.10 per metre. There was nobeginning or ending inventory of geese or fabric. Actual directlabour was 5200 hours at R7.75 per hour.
Required
1. Determine the total materials price variance and whether it isfavourable or unfavourable. (5)
2. Determine the total materials usage variance and whether it isfavourable or unfavourable. (5)
3. Determine the labour rate variance and whether it is favourableor unfavourable. (3)
4. Determine the labour efficiency variance and whether it isfavourable or unfavourable.
