MacDowell Company Manufactures 100 Kg Bags of Fertilizer That Have

Essay

MacDowell Company manufactures 100 kg bags of fertilizer that have the following unit standard costs for direct materials and direct labour:
The following activities were recorded for October:
$$\begin{array} { l r } \text { Direct materials } ( 100 \mathrm {~kg} @ \$ 1.00 \text { per kilogram) } & \$ 100.00 \\\text { Direct labour } ( 0.5 \text { hours at } \$ 24 \text { per hour } ) & 12.00 \\\text { Total standard direct cost per } 100 \mathrm {~kg} \text { bag } & \$ 112.00\end{array}$$ There were no beginning or ending work-in-process inventories.
Required:
- $\quad 1,000$ bags were manu factured.
- $\quad 95,000 \mathrm {~kg}$ of materials costing $\$ 76,000$ were purchased.
- $\quad 102,500 \mathrm {~kg}$ of materials were used.
- $\quad \$ 12,000$ was paid for 475 hours of direct labour. A. $\quad$ Compute the direct materials variances.
B. $\quad$ Compute the direct labour variances.
C. $\quad$ Give possible reasons for the occurrence of each of the preceding variances.