Stupendous Games developed a new play station called StupendouS. Stupendous Games has a standard cost system...

Stupendous Games developed a new play station called StupendouS. Stupendous Games has a standard cost system to help control its costs. The following standards have been established for StupendouS.
• Direct materials 15 grams per StupendouS.
• Standard direct material cost per StupendouS is $11.
• Direct labour 1.2 hours per StupendouS.
• Standard cost of direct labour is $15.00 per StupendouS.

During October the company produced 9,000 StupendouS units. Production data for October are:

• Direct materials: 165,000 grams were purchased at a cost of $115,000; 20,000 grams of this was still in inventory at the end of the month.
• Direct labour: 11,000 direct labour hours were worked at a cost of $142,500.

Required:
Compute the following variances for October:
a) Direct materials price and quantity variances.
b) Direct labour rate and efficiency variances.
c) Are the variances computed in (a) and (b) linked? Provide a brief commentary on the variances computed above, including explanations regarding the price and the quantity, and the rate and the efficiency variances.

Expert Solution

ekkarill92 answered 2 years ago

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