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during july nemo ltd manufactured 500 units of a special multiplayer fabric called e 4276234

During July, Nemo Ltd manufactured 500 units of a special multiplayer fabric called Everflex following information from the everflex production department pertains to July:

Direct material purchased: 18 000 metres @ $5.20 per metre ………… $93 600

Direct material used: 9500 metres @ $5.20 per metre ………………….. 49 400

Direct labour: 2100 hours @ $18.30 per hour ……………………………. 38.43

The standard prime costs for one unit of Everflex are as follows:

Direct materials: 20 metres @ $5 per metre …………………………… $100

Direct labour: 4 hours @ $19 per hour ……………………………………. 76

Total standard prime cost per unit of output ……………………………. $176

Required:

1. Calculate the following variances for the month of July, indicating whether each variance is favourable or unfavourable:

(a) Direct material price variance.

(b) Direct material quantity variance.

(c) Direct labour rate variance.

(d) Direct labour efficiency variance.

2. Draw a graph depicting Nemo’s direct labour variances for July. Include the joint rate efficiency variance in your graph. (See Exhibit 10.11 for guidance.)

3. Provide an interpretation of the variances that are revealed in the graph?

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