Response to the following problem:
At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products:
Direct materials (5 lbs. @ $4.00) $20.00
Direct labor (2 hrs. @ $11.25) 22.50
Standard prime cost per unit $42.50
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.