Problem - Materials and Labor Variances
At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products:
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Direct materials (6 lbs. @ $5)
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$30.00
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Direct labor (2 hrs. @ $12)
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24.00
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Standard prime cost per unit
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$54.00
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The actual results for the year are as follows:
a. Units produced: 350,000.
b. Materials purchased: 1,860,000 pounds @ $5.10.
c. Materials used: 1,850,000 pounds.
d. Direct labor: 725,000 hours @ $11.85.
Required:
1. Compute price and usage variances for materials.
2. Compute the labor rate and labor efficiency variances.