Company manufactures soda cans. A unit of production is a case of 12 dozen cans. The following standards per case have been set DM = 4kg at $.60 per kg and DL
.25 hours at $12 per hour.

Actual material purchases amounted to 240000kg at $.58 per kg. Actual costs incurred in the production of 50000 units were DM = $130000 for 210000kg and DL
= $146400 for 12000 hours.

1.) use the variances formulas to compute the DM price and Qty variances and the direct-labor rate and efficiency variances. Indicate if each is F or
Unfavorable.

2.) Make journal entries to record the material and labor variances.

3.) Based only on the #s comment on a likely reason for the labor variances and whether the management should consider a shift in the production strategy for
labor. Are such assessments clear cut for material variances?