Question - Reed Corp. has set the following standard direct materials and direct labor per unit for the product it manufactures.
Direct materials (15 lbs. @ $3 per lb.) - $45
Direct labor (4 hrs. @ $15 per hr.) - 60
Direct June the company incurred the following actual costs to produce 8,900 units.
Direct materials (136,400 lbs. @$2.80 per lb.) - $381,920
Direct labor (39,000 hrs @ $15.10 per hr.) - 588,900
(1) Compute the direct materials price and quantity variances.
(2) Compute the following direct labor rate variance and the direct labor efficiency variance, Indicate whether each variance is favorable or unfavorable.