Bayou Barbecue Inc

Essay

Bayou Barbecue Inc.in the US bottles and sells barbecue sauce.In the current year,the company had expected to sell 500 000 bottles but actually bottled and sold 600 000 bottles.The standard direct materials cost for each bottle is $.36 comprised of 12 ounces of material at a cost of $.03 per ounce.During the year,7 800 000 ounces of material was purchased out of which 7 350 000 ounces were used at a cost of $.035 per ounce.
Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U).
A. Direct materials price variance
B. Direct materials usage variance