Sterling Manufacturing Has Developed the Following Standards for One of Its

question 36

Essay

Sterling Manufacturing has developed the following standards for one of its products. Materials: $5 \mathrm{~m} \times \$ 6$ per metre $\quad$$\quad$$\$ 30$
Direct labour: 2 hours $\times \$ 8$ per hour $\quad$ 16 The company records materials price variances at the time of purchase.
The following activity occurred during the month of December: $$\begin{array} { l l } \text { Materials purchased: } & 5,200 \mathrm {~m} \text { costing } \$ 29,900 \\\text { Materials used: } & 4,750 \mathrm {~m} \\\text { Units produced: } & 1,000 \text { units } \\\text { Direct labour: } & 2,100 \text { hours costing } \$ 17,850\end{array}$$ Required: A. Calculate the direct materials price variance.
B. Calculate the direct materials usage variance.
C. Calculate the direct labour rate variance.
D. Calculate the direct labour efficiency variance.

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Definitions:

Franchise

A license to sell another’s products or to use another’s name in business, or both.

Collateral

An asset pledged as security for the repayment of a loan, forfeitable in case of default.