In Early 2009,Duncan Manufacturing Inc Actual Results for 2009 Were Determined to Be as Follows

question 32

Essay

In early 2009,Duncan Manufacturing Inc.had budgeted for the production and sale of 12 000 units at a sales price of $20 per unit.The following information is available regarding the standard cost for each unit: $\begin{array}{ll} \text { Direct materials: } & \text {\$ 4.00 (4 pounds at \$ 1.00 per lb)}\\ \text { Direct labour:} & \text {\$ 2.50(10 minutes of assembly at \$ .25 per minute}\\\end{array}$

Actual results for 2009 were determined to be as follows:
$\begin{array}{ll}\text { Number of units produced }\\{\text { and sold: }} & 11200 \text { units } \\\text { Sales revenue: } & \$ 235200 \text { (\$21 per unit) } \\\text { Direct materials cost: } & \$ 47840 \text { (46 } 000 \text { lbs purchased and used at } \$ 1.04 \text { per lb } \\\text { Direct labour cost: } & \$ 22000(110000 \text { minutes at } \$ .20 \text { per minute) }\end{array}$

Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U).
A. Sales price variance
B. Direct materials price variance
C. Direct materials usage variance
D. Direct labour rate variance
E. Direct labour efficiency variance

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Definitions:

Market System

A market mechanism where the allocation of resources for investment, production, and distribution is driven by the forces of supply and demand, with the pricing of goods and services set freely within the market.

Minimize Cost

The process of finding the most efficient level of production, where the combination of inputs results in the lowest possible cost.

Unit of Output

The basic measure of productivity or product which is generated by a production process, operation, or project.

Competitive Market Economy

A system where market forces govern the production, distribution, and pricing of goods and services, featuring many buyers and sellers and free entry and exit from the market.