Glitzy Company produces several products in its factory, including a wedding gown. The company uses a standard costing system to assist in the control of costs. According to the standards that have been set for wedding gowns, the factory should work 780 direct labour-hours each month and produce 1,950 gowns. The standard costs associated with this level of production activity are as follows:
Total Per Unit
of Product
Direct Materials .................................... $35,490 $18.20
Direct Labour ....................................... $7,020 $3.60
Variable Manufacturing Overhead
(based on direct labour-hours) ............... $ 2,340 $ 1.20
$23.00
During June, the factory worked only 760 direct-labour hours and produced 2,000 wedding gowns. The following actual costs were recorded during the month:
Total Per Unit
of Product
Direct Materials (6,000 yards).................... $36,000 $18.00
Direct Labour ....................................... $ 7,600 $ 3.80
Variable Manufacturing Overhead ............... $ 3,800 $ 1.90
$23.70
At standard, each robe should require 2.8 yards of material. All of the materials purchased during the month were used in production.
REQUIRED:
A. Compute the following variances for June:
i. Direct Material Price Variance
ii. Direct Material Quantity Variance
iii. Direct Labour Rate Variance
iv. Direct Labour Efficiency Variance
v. Variable Manufacturing Overhead Spending Variance
Variable Manufacturing Overhead Efficiency Variance