Baker Company Adopted a Standard Cost System Several Years Ago

question 61

Essay

Baker Company adopted a standard cost system several years ago. The standard costs for the prime costs of its single product follow: $\begin{array}{ll}\text { Material: } 10 \mathrm{~kg} @ \$ 4.50 \text { per kilogram } & \$ 45.00 \\\text { Labour: } 6 \text { hours } @ \$ 8.50 \text { perhour } & \$ 51.00\end{array}$ The following operating data were taken from the records for December:
1.
Units completed:
5,800 units
2.
Budgeted output:
6,000 units
3.
Materials purchased:
60,000 kg
4.
Total actual labour costs:
$306,600
5.
Actual hours of labour:
36,500 hours
6.
Material usage variance:
$2,250 unfavourable
7.
Total material variance:
$450 unfavourable
Required:
Compute the following:
A. Labour rate variance
B. Labour efficiency variance
C. Actual kilograms of material used in the production process
D. Actual cost paid per kilogram of material

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Definitions:

Correlation Coefficient

A statistical measure that calculates the strength and direction of the linear relationship between two variables.

Correlation Coefficient

An index assessing the power of association between a pair of variables.

Dependent Variable

A dependent variable is the outcome or response that researchers are interested in explaining or predicting, changing in response to manipulation of the independent variable.

Independent Variable

The variable in an experimental or observational study that is manipulated or categorized to observe its effect on the dependent variable.