Bowling Inc. makes a popular bowling ball. The company wants to develop budgets (standards) for...
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Bowling Inc. makes a popular bowling ball. The company wants to develop budgets (standards) for material, labour, and variable overhead. The budgeted (standard) cost for one bowling ball would be:
| Standard Price or Rat | Standard Cost | ||
| Direct materials | 3.5 | $6 | 21 | |
| Direct labor | 2 | $18 an hour | 36 | |
| Variable overhead | 2 | $4 an hour | 8 | |
| Total standard cost per bowling ball | $65 |
The following data are for last months production:
Number of bowling balls completed. 5,000 units
Cost of material purchased (20,000 kilos $5.40 per kilo)...... $108,000
Kilos of material used ..................... 20,000 kilos
Using the data above, compute the direct material price and efficiency variances for the bowling balls
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