Question - The standards for one case of Saycheles are:
Direct Materials 7lbs @ $5.90/lb
Direct Labor 4.2hrs @ $13.00/hr
During the week ended April 15, the following activity took place:
- 14,500 lbs. of raw material were purchased for inventory at a total cost of $81,200;
- 1,800 cases of finished product were produced;
- 13,680 lbs. of raw material were used;
- 7,380 labor hours were worked at an average rate of $13.40 per hour.
Calculate each of the following variances:
(a) Raw materials purchase price variance.
(b) Raw materials usage variance.
(c) Direct labor rate variance.
(d) Direct labor efficiency variance.
(e) Explain the factors that most likely caused the variances computed above.