L04 Variances I.pptVIP

$8.00 per hour $1.75 per kilogram Gandolph Game Company has established the following standards for the prime costs of one unit of its chief product, dartboards. $16.00 Total 0.25 hour 2.00 Direct Labour 8 kilograms $14.00 Direct Material Standard Price or Rate Standard Quantity Standard Cost Efficiency Variance = SR (AH – SH) = $8 (10,000 – {0.25 x 38,000}) = $8 (10,000 – 9,500) = $4,000 Unfavourable During September, Gandolph purchased 320,000 kilograms of direct material at a total cost of $608,000. The total wages for September were $84,000, 90 percent of which were for direct labour. Gandolph manufactured 38,000 dartboards during September, using 285,000 kilograms of direct material and 10,000 direct-labour hours. Next Week Variances II Please read exercise 11-32 and problem 11-50 from Hilton prior to lecture * * Material Variances Hanson Inc. has the following material standard to manufacture one Zippy: 1.5 kg per Zippy at $4.00 per kg Last week 2,800 kg of material were purchased at a total cost of $10,920, and 1,700 kg were used to make 1,000 Zippies. Zippy Material Variances Actual Quantity Actual Quantity  Purchased Purchased × ×  Actual Price Standard Price 2,800 kg 2,800 kg  × ×  $3.90 per kg $4.00 per kg $10,920 $11,200 Price variance$280 favorable Price variance increases because quantity purchased increases. Zippy Actual Quantity  Used Standard Quantity  × ×  Standard Price Standard Price