Tractor Corporation produces toy tractors. The company uses the following direct cost categories: Category Standard Inputs for 1 output Std....

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Accounting

Tractor Corporation produces toy tractors. The company uses thefollowing direct cost categories:
Category Standard Inputs
for 1 output Std. Cost
per input
Direct Materials 4.00 $12.50
Direct Labour 1.40 9.50
Direct Marketing 0.54 5.50
Actual performance and budgeted performance for the company isshown below:

Actual output: (in units) 5,000

Direct Materials:
Materials costs $299,000
Input purchased and used 23,000
Actual price per input $13.00

Direct Manufacturing Labour:
Labour costs $ 95,000
Labour-hours of input 9,500
Actual price per hour $10.00
Direct Marketing Labour:
Labour costs $ 40,000
Labour-hours of input 5,000
Actual price per hour $ 8.00

Question 1: What is the price variance of the directmaterials?
a) $10,175 unfavourable
b) $15,213 favourable
c) $16,875 favourable
d) $11,500 favourable
e) $11,500 unfavourable
Question 2: What is the direct manufacturinglabour efficiency variance?
a) $500 favourable
b) $672 favourable
c) $500 unfavourable
d) $28 favourable
e) $672 unfavourable

Answer & Explanation Solved by verified expert

3.9 Ratings (514 Votes)

Answer 1 Direct Material price variance Actual Quantity of material used x Actual price per unit of material standard price of per unit material See Answer

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Category	Standard Inputs for 1 output	Std. Cost per input
Direct Materials	4.00	$12.50
Direct Labour	1.40	9.50
Direct Marketing	0.54	5.50

Materials costs	$299,000
Input purchased and used	23,000
Actual price per input	$13.00

Labour costs	$ 95,000
Labour-hours of input	9,500
Actual price per hour	$10.00

Labour costs	$ 40,000
Labour-hours of input	5,000
Actual price per hour	$ 8.00

		a) $10,175 unfavourable
		b) $15,213 favourable
		c) $16,875 favourable
		d) $11,500 favourable
		e) $11,500 unfavourable

		a) $500 favourable
		b) $672 favourable
		c) $500 unfavourable
		d) $28 favourable
		e) $672 unfavourable