During March,Raining Unlimited Produced 5,500 Umbrellas from Nylon That Costs

question 116

Essay

During March,Raining Unlimited produced 5,500 umbrellas from nylon that costs $0.45 per metre,which is $0.05 per metre cheaper than the standard cost.It also used 3,000 direct labour hours at a rate of $6.50 per hour.Its direct materials standard is 1 m per umbrella.Its direct labour standard is 0.5 hour per umbrella.
Its materials usage variance was a favourable $500,and its labour rate variance was a favourable $900.
A. Calculate the actual quantity of materials.
B. Calculate the standard labour rate.
C. Determine the materials price variance and whether it is favourable or unfavourable.
D. Determine the labour efficiency variance and whether it is favourable or unfavourable.
E. Record the entries for the materials purchase, the issuance and usage of materials, and the labour variances.
F. Provide the closing entries.

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold, representing the profitability of a company's core business activities.

Single-Step Statement

A simplified income statement format that sums all revenues and gains together and subtracts all expenses and losses in one step to arrive at net income.

Total Revenues

The cumulative revenue produced from the sales of products or services central to a business's main activities.

Gross Profit

Gross profit is the financial metric that results from subtracting the cost of goods sold from revenue, showing the profitability of a company before accounting for operating expenses.