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Saskatchewan Can Company manufactures recyclable soft-drink cans.

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Saskatchewan Can 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, .25 hour Quantity, 4 kilograms
Rate, $16 per hour Price, $.80 per kilogram

Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs incurred in the production of 50,000 units were as follows:

Direct labor: $211,900 for 13,000 hours
Direct materials: $170,100 for 210,000 kilograms

1. Compute the direct-material quantity variance and determine whether it is favorable or unfavorable.
2. Compute the direct-labor rate variance and indicate whether it is favorable or unfavorable.
3. Calculate the direct labor efficiency variance and indicate whether it is favorable or unfavorable.

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Solution Summary

This solution provides computations in Excel for direct-material quantity, direct-labor rate variance, and direct labor efficiency variance.

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