Reference no: EM132522056

Caroline Manufacturing Company manufactures a single product. The standard cost of one unit of this product is:

Direct Materials: 6 metres at $1.50          $ 9.00

Direct Labour: 1 hour at $6.75               $ 6.75

Variable Overhead: 1 hour at $4.50         $ 4.50

Total Standard Variable Cost per Unit        $20.25

During the month of October, 6,000 units were produced. Selected cost data relating to the month's production follow:

Material Purchased: 60,000 metres at $1.43               $85,800

Material Used in Production: 38,000 metres                 -

Direct Labour: ? hours at $ ? per hr.                    $41,925

Variable Overhead Cost Incurred                          $30,713

Variable Overhead Efficiency Variance                   $ 2,250 unfavourable

• There was no beginning inventory of raw materials. The variable overhead rate is based on direct labour-hours.

Required:

Question a) For direct materials, compute the price and quantity variances

Question b) Prepare journal entries

Question c) For direct labour, compute the rate and efficiency variances

Question d) Prepare journal entries

Question e) For variable manufacturing overhead, compute the spending and efficiency variances

Question f) State possible causes of at least 2 computed variances