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Gardenia Ltd produces and sells ceramic plant pots. Gardenia Ltd had the following standards for...

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Accounting

Gardenia Ltd produces and sells ceramic plant pots. Gardenia Ltd had the following standards for one type of its products for May 2022:

Standard per pot

Direct materials

2 kilograms

$10 per kilogram

Direct manufacturing labour

0.5 hour

$15 per hour

The following information about the actual performance during June 2018 was as follows:

  1. Actual output units (pot) produced, 1 800
  2. Direct materials purchased and used 3 780 kilograms at a price of $10.35 per kilogram
  3. Actual direct manufacturing labour costs, $13 365
  4. Actual hours of direct labour used were 810 hours.

Required (show your workings):

Calculate favourable or unfavourable price variance for direct materials

3 marks

Calculate favourable or unfavourable efficiency variance for direct materials

3 marks

Calculate favourable or unfavourable rate (price) variance for direct labour

3 marks

Calculate favourable or unfavourable efficiency variance for direct labour

3 marks

Give explanation for the variance occurred for direct material variances

3 marks

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