Supersports makes sporting equipment

Supersports makes sporting equipment and accessories and uses the traditional standard costing method. The materials and labour costs for one of their popular products – a sports towel is listed below:

Direct Materials 0.5mtr @ $11 per mtr $ 5.50

Direct manufacturing labour 0.75 hr @ $16 per hr $12.00

During the 2016 year 2000 sports towels were produced and sold. The actual costs of materials and labour to produce 2000 sports towels were as follows:-

Direct materials 1100 mtr @11.50 per mtr $12,650

Direct manufacturing labour 1485 hrs @ $15.80 per hr $23,463

Required:

i. Calculate price and efficiency variances for direct materials and direct manufacturing

Labour variances for 2016

ii. Explain one reason for each of the material and labour variances