# PROBLEM 1030 Materials and Labour Variances; Computations from Incomplete Data [LO1, LO2, LO3]…

PROBLEM 10–30 Materials and Labour Variances; Computations from Incomplete Data [LO1, LO2, LO3]

Talia Company produces a single product. The company has set standards as follows for materials and labour:

Direct Materials

Direct Labour Standard quantity or hours per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Standard price or rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Standard cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? kilograms

? per kilogram

? 1.25 hours

\$10 per hour

\$12.50

During the past month, the company purchased 3,000 kilograms of direct materials at a cost of \$8,250. All of this material was used in the production of 700 units of product. Direct labour cost totalled \$6,825 for the month. The following variances have been computed:

Required:

1.              For direct materials:

a.       Compute the standard price per kilogram for materials.

b.       Compute the standard quantity allowed for materials for the month’s production.

c.       Compute the standard quantity of materials allowed per unit of product.

2.              For direct labour:

a.       Compute the actual direct labour cost per hour for the month.

b.       Compute the labour rate variance.

(Hint: In completing the problem, it may be helpful to move from known to unknown data either by using the variance formulas or by using the columnar format shown in Exhibits 10–4 and 10–6.)