HA2011 Tutorial Questions On Management Accounting

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Question 4 – Week 8 (11b) (7 marks)

The data below relate to the standards for the sole product of Marshal Corporation in August:

Standard direct material price $1.40 per kg
Standard quantity of direct material 20 kg per unit
Standard direct labour rate $17.00 per hour
Standard direct labour hour 5 hours per unit

 

Actual results for November are as follows:

Actual output 1,100 units
Direct material purchased 36,000 kg @ $1.76 per kg
Direct material used 19,000 kg
Direct labour 5,200 hours @ $18 per hour

 

Required:

Calculate the following variances, indicating whether each variance is favourable or unfavourable:

  1. Direct material price variance
  2. Direct material quantity variance
  3. Direct labour rate variance
  4. Direct labour efficiency variance

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