Assignment Task: Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:
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Standard Quantity
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Standard Price
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Direct materials
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2.5 pounds
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$3 per pound
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Direct labor
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0.6 hours
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$10 per hour
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During March 2016, the following activity was recorded by the company relating to the production of tybos:
1. The company produced 9,000 units during the month.
2. A total of 24,000 pounds of materials were purchased at a cost of $66,000.
3. A total of 24,000 pounds of materials were used in production.
4. 5,000 hours of labor were incurred during the month at a total wage cost of $55,000.
Required: Calculate the following variances for March for Riggins, Inc. Identify whether the variance is favorable or unfavorable?
(a) Materials Price Variance
(b) Materials Quantity Variance
(c) Labor Price Variance
(d) Labor Quantity Variance
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