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Craft Brewery Co

Accounting

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Craft Brewery Co. manufactures specialized beer. Each batch requires 4 kilograms of barley and takes .3 hours of direct labour. The standard cost of the barley used by Craft Brewery is $8 per kilogram and the standard labour cost is $10 per hour. In November, Craft Brewery purchased 15,000 kilograms of barley for $120,750. During the year, the company manufactured 4,000 bottles. Payroll reported a total of 1,480 direct labour hours at a cost of $14,060.

Instructions

a.         Calculate the materials price and quantity variances and indicate whether the variances are favourable or unfavourable.

b.         Calculate the labour price and quantity variances and indicate whether the variances are favourable or unfavourable.