Question - P&G uses a traditional standard costing system to control the cost and has established the following material and labor standards to produce one box of detergent.
Direct Material : 1.5 pounds @ $12 per pound $18
Direct labour 6 hrs $24 per hour $ 14.40
During Aug 2015, a company produced and sold 3000 boxes of Detergent Dx. 8000 pounds of direct materials were purchased at 11.50 per pound. Out of this 8000 pounds, 6000 pounds were used during August. There was no inventory at the beginning of August. 1600 of direct labour hours were recorded during a month at a cost of $ 40,000.
Required:
1. Compute material price and material quantity variance?
2. Compute direct labour rate and direct labour efficiency variance?