MATERIALS AND LABOR VARIANCES
At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products:
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Direct materials (5 lbs. @ $4.00)
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$20.00
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Direct labor (2 hrs. @ $11.25)
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22.50
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Standard prime cost per unit
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$42.50
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The actual results for the year are as follows:
a. Units produced: 175,000.
b. Materials purchased: 930,000 pounds @ $4.10.
c. Materials used: 925,000 pounds.
d. Direct labor: 362,500 hours @ $11.15.
Required:
1. Compute price and usage variances for materials.
2. Compute the labor rate and labor efficiency variances.