Question

1. Plummer Corporation makes a product with the following standard costs:

Inputs	Standard Quantity or Hours	Standard Price or Rate	Standard Cost Per Unit
Direct materials	4.3 pounds	$6.00 per pound	$25.80
Direct labor	0.7 hours	$20.00 per hour	$14.00
Variable overhead	0.7 hours	$2.00 per hour	$1.40

  

The company reported the following results concerning this product in August.

Originally budgeted output	1,900 units
Actual output	1,700 units
Raw materials used in production	7,210 pounds
Purchases of raw materials	7,210 pounds
Actual direct labor-hours	1,260 hours
Actual cost of raw materials purchases	$43,320
Actual direct labor cost	$25,578
Actual variable overhead cost	$2,394

The materials price variance is recognized when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.

Required:
a. Compute the materials variances.

1. Price variance
2. Efficiency variance
3. Total variance
   b. Compute the labor variances

1. Price variance
2. Efficiency variance
3. Total variance
   c. Compute the variable overhead variances

1. Rate variance.
2. Efficiency variance
3. Total variance.

Answer 1

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