Variances : explained
World Wide Produts has developed the following standards for one of its products:
Direct materials 25 pounds at $4 per pound
Direct labor 8 hours at $10 per hour
The following activity was recorded for the production of 12,000 units during the month of August.
Materials purchased 355,000 pounds at $4.15 a pound
Materials used 305,000 pounds
Direct labor 95,400 hours at $10.75 an hour
a. Compute the materials price variance.
b. Compute the materials usage variance.
c. Compute the labor rate variance.
d. Compute the labor efficiency variance.