Gemma Products Produces and Sells a Variety of Domestic Goods

question 6

Essay

Gemma Products produces and sells a variety of domestic goods including sheets.In the current year,the company budgeted for the production and sale of 10 000 sets;however,12 000 sets were actually produced and sold.Each set has a standard requiring 10 metres of material at a cost of $1.10 per metre and 20 minutes of direct labour (for sewing,assembly,and inspection)at a cost of $.20 per minute.Actual costs for the production of 12 000 sets were $138 240 for materials (128 000 metres purchased and used @ $1.08 per metre)and $55 200 for labour (230 000 minutes @ $.24 per minute).
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
Direct labour rate variance
D. Direct labour efficiency variance

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Definitions:

Intended Beneficiary

A person or entity for whom a contract is specifically made to benefit, having the legal right to enforce the contract if not fulfilled.

Assignable

The capability of a contract or other legal document to be transferred from one party to another.

Membership

The state or condition of being a member or part of an organization or group.

Public Policy

Principles and standards regarded by the legislative or judicial branches of government as being of fundamental concern to the state and its citizens.