Materials and Labor Variances. The Cakebread Candy Company presents the following data for October.
Standards per Batch Actual Total
Materials...................1 pound at 2.50 per pound 49,000 pounds
Labor........................1.5 hours at 3.00 per hour 79,000 hours
Batches Produced.... 48,000 batches
During the month, the firm purchased 49,000 pounds of materials for $127,500. Wages earned were $214,000. Compute the labor and material variances.
Material quantity variance = ( Standard Quantity - Actual Qunatity ) * Standard Rate = (( 48000*1)-49000)*2.50 = (48000-49000)*2.50 i.e 2500 unfavourable Material price variance = (Standard price - Actual Price ) * Actual qunatity = ( 2.50-2.60)*49000 i.e 4900 unfavourable Labour rate variance = ( Standard Rate - Actual Rate ) * Actual Hours = ( 3 - 2.7089) * 79000 i.e 23000 Favorable Labour efficiency variance = ( Standrad hours - Actual Hours ) * Standard rate = (( 48000*1.50)-79000)*3 = 21000 unfavorable
Question: Evaluate cause of variances. refer to the information in above for the Cake Candy Company. based on the information for the company, write a short report explaining the cause of the variances that was computed.