Question :
A firm has established standards as given:
Direct material 3 pounds @ $4/pound = $12 per unit
Direct labor 2 hours @ $8/hour = $16 per unit
Variable overhead 2 hours @ $5/hour = $10 per unit
Actual production figures for the past year were as given:
Units produced 500
Direct materials used 1600 pounds
Direct material purchased (1,600 pounds) $6,560
Direct labor cost (950 hours) $7790
Variable overhead cost incurred $4655
Required:
Determine the materials price variance (amount and favorable or unfavorable)?
Evaluate materials quantity variance (amount and favorable or unfavorable)?
Determine the labor rate variance (amount and favorable or unfavorable)?
Evaluate the labor efficiency variance (amount and favorable or unfavorable)?