Problem - Wright Industry Inc. uses a standard cost system in which direct materials inventory is carried at standard cost. Wright has established the following standards for the prime costs of one unit of products.
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Standard Qty
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Standard Price
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Standard Cost/unit
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Direct material
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8 pounds
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$1.80 per pound
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$14.40
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Direct labor
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0.25 hour
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$8 per hour
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$2.00
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Variable overhead
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0.5 hours
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$2 per hour
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During May, the company purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Wright manufacturing 19,000 units of product using 142,500 pounds of direct material and 5,000 direct labor-hours.
a) Calculate the materials price variance.
b) Calculate the materials quantity variance.
c) Calculate the direct labor rate variance.
d) Calculate the direct labor efficiency variance.