Question - Rhodes Corporation manufactures a product with the following standard costs:
Direct materials (20 yards @ $1.85 per yard) $ 37.00
Direct labor (4 hours @ $12.00 per hour) 48.00
Variable factory overhead (4 hours @ $5.40 per hour) 21.60
Fixed factory overhead (4 hours @ $3.60 per hour) 14.40
Total standard cost per unit of output $121.00
Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output).
The following information pertains to the month of July:
Direct materials purchased (16,000 yards @ $1.80 per yard) $28,800
Direct materials used (9,400 yards)
Direct labor (1,880 hours @ $12.20 per hour) 22,936
Actual factory overhead 16,850
Actual production in July: 460 units
a. Compute the following variances for the month of July, indicating whether each variance is favorable or unfavorable:
(1) Materials purchase price variance
(2) Materials quantity variance
(3) Labor rate variance
(4) Labor efficiency variance