MacDowell Company manufactures 100 kg bags of fertilizer that have the following unit standard costs for direct materials and direct labour: $\begin{array}{lr}
\text { Direct materials }(100 \mathrm{~kg} @ \$ 1.00 \text { per kilogram) } & \$ 100.00 \
\text { Direct labour }(0.5 \text { hours at } \$ 24 \text { per hour) } & 12.00 \
\text { Total standard direct cost per } 100 \mathrm{~kg} \mathrm{bag} & \$ 112.00
\end{array}$ The following activities were recorded for October: - 1,000 bags were manufactured.
- $ 95,000 \mathrm{~kg} $ of materials costing $ \$ 76,000 $ were purchased.
- $102,500 \mathrm{~kg} $ of materials were used.
- $ \$ 12,000 $ was paid for 475 hours of direct labour. There were no beginning or ending work-in-process inventories.
Required: A. Compute the direct materials variances.
B. Compute the direct labour variances.
C. Give possible reasons for the occurrence of each of the preceding variances.

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The Answer of MacDowell Company manufactures 100 kg bags of fertilizer that have the following unit standard costs for direct materials and direct labour: $\begin{array}{lr}
\text { Direct materials }(100 \mathrm{~kg} @ \$ 1.00 \text { per kilogram) } & \$ 100.00 \
\text { Direct labour }(0.5 \text { hours at } \$ 24 \text { per hour) } & 12.00 \
\text { Total standard direct cost per } 100 \mathrm{~kg} \mathrm{bag} & \$ 112.00
\end{array}$ The following activities were recorded for October: - 1,000 bags were manufactured.
- $ 95,000 \mathrm{~kg} $ of materials costing $ \$ 76,000 $ were purchased.
- $102,500 \mathrm{~kg} $ of materials were used.
- $ \$ 12,000 $ was paid for 475 hours of direct labour. There were no beginning or ending work-in-process inventories.
Required: A. Compute the direct materials variances.
B. Compute the direct labour variances.
C. Give possible reasons for the occurrence of each of the preceding variances.

MacDowell Company Manufactures 100 Kg Bags of Fertilizer That Have