Question #3
Expected production (units) 15,000
Standard DML hours per unit 7
Standard DML rate per hour $26
Standard pounds of DM usage per unit 3
Standard DM price per pound $14
Actual
Units produced 16,000
Pounds of DM purchased 53,000
Total cost of DM purchased $689,000
Pounds of DM used 50,000
DML hours worked 106,000
Total cost of DML $2,968,000
a) Calculate the following variances:
Direct manufacturing labor rate variance
Direct manufacturing labor usage variance
Direct materials price variance (how we did it in the chat session)
Direct materials usage variance
b) Explain what each of the calculated variances imply about the firm's operations. Be specific!
Direct manufacturing labor rate variance
Direct manufacturing labor usage variance
Direct materials price variance
Direct materials usage variance