Problem:
Balt Company used 5,000 pounds of Material H to produce 800 units of Product C8 last period. The company has established the standard of using 7 pounds of Material H per unit of C8, at a price of $7.50 per pound. During the period the inventory for Material H decreased by 2,000 pounds. The firm spent $25,000 during the period to purchase material H.
Required: Calculate the direct materials price and usage variances (be sure to indicate whether the variances are favorable or unfavorable).