2. Compute the standard quantity of Alpha SR40 (in grams) per capsule that passés tinal inspection. (Carry computations to two decimal places.) 3. Using the data from (1) and (2) above, prepare a standard cost card showing the standard cost of Alpha SR40 per capsule of the anticoagulant drug. EXERCISE 10-2 Material Variances [LO2] Fantastic Feeder Products Inc. manufactures high-quality wooden cutting boards sold to restaurants and gourmet home cooks. One of these boards, the CertiPro II, requires an expensive hardwood. During a recent month, the company manufactured 1,200 CertiPro Il cutting boards using 540 metres of hardwood. The hardwood cost the company $2,970. The company\'s standards for one CertiPro Il cutting board are 0.4 metres of hardwood, at a cost of $5.00 per metre. Required: 1. What cost for wood should have been incurred to make 1,200 CertiPro H cutting boards? How much greater or less is this than the cost that was incurred? Break down the difference computed in (1) above into a materials price variance and a materials quantity variance. 2. EXERCISE 10-3 Direct Labour Variances [L03] Exercise 10-3: Help Me Solve It Tutorial Click here to view a transcript of this video Skylnc provides in-flight meals for a number of major airlines. One of the company\'s products is stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. During the most recent week, the company prepared 6,000 of these meals, using 1,150 direct labour-hours. The romnany naid thesa direct labour workers a total of $11,500 for this work, or $10 per hour.
Actual Material used = 540 metres of hardwood;
Actual price of the material = $2,970;
Standard Material per one unit = 0.4 metres
Standard price of material = $5.00 per metre.
1. Standard Material cost for 1,200 cutting boards = 1,200 x 0.4 x $5 = $2,400
$2,400 should have been incurred to make 1,200 cutting boards.
$570 more is incurred in actual.
Material Cost Variance is $570 Adverse.
2. Material Price Variance and Material Quantity Variance:
Material Price Variance = Actual Quantity (Standard Price - Actual Price)
= 540 meters ($5.00 - $2970/540)
= 540 x ($5 - $5.5)
= -$270
= $270 Adverse.
Material Quantity Variance = Standard Price (Standard Quantity for actual output - Actual Quantity)
= $5.00 (1,200 x 0.4 - 540)
= $5.00 (480 - 540)
= - $300
= $330 Adverse
Material Cost Variance = Material Price Variance + Material Quantity Variance
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