Problem - McDaniel Company manufactures 100-pound bags of fertilizer that have the following unit standard costs for direct materials and direct labor:
Direct materials (100 lbs. @ $1.00 per lb.) $100.00
Direct labor (0.5 hours at $24 per hour) 12.00
Total standard prime cost per 100 lb. bag $112.00
The following activities were recorded for October:
- 1,000 bags were manufactured.
- 95,000 lbs. of materials costing $76,000 were purchased.
- 102,500 lbs. of materials were used.
- $12,000 was paid for 475 hours of direct labor.
There were no beginning or ending work-in-process inventories.
Required:
1. Compute the direct materials price and usage variances.
2. Compute the direct labor rate and efficiency variances.