Response to the following problem:
Legumbre Company produces vegetable juices, sold in gallons. Recently, the company adopted the following material standard for one gallon of its tomato juice:
Direct materials (128 oz: @ $0.06) = $7.68
During the first week of operation, the company experienced the following results:
a. Gallon units produced: 20,000.
b. Ounces of materials purchased and used: 2,600,000 ounces at $0.07.
c. No beginning or ending inventories of raw materials.
Required:
1. Compute the materials price variance.
2. Compute the materials usage variance.