Problem - Direct Materials and Direct Labor Variances
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
|
Standard Quantity or Hours
|
Standard Price or Rate
|
Standard Cost
|
|
Direct materials
|
4.6 pounds
|
$ 2.50 per pound
|
$ 11.50
|
|
Direct labor
|
0.2 hours
|
$ 12.00 per hour
|
$ 2.40
|
During the most recent month, the following activity was recorded:
a. Twenty thousand pounds of material were purchased at a cost of $2.35 per pound.
b. All of the material purchased was used to produce 4,000 units of Zoom.
c. 750 hours of direct labor time were recorded at a total labor cost of $10,425.
Required:
1. Compute the materials price and quantity variances for the month.
2. Compute the labor rate and efficiency variances for the month.