Materials and Labor Variances
Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:
Direct materials (2.4 lbs. @ $0.95) | $2.28 |
Direct labor (0.75 hr. @ $7.40) | 5.55 |
Standard prime cost | $7.83 |
During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:
Direct materials | $72,450 |
Direct labor | $186,259 (for 22,450 hrs.) |
Required:
Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.
Material Variances | ||
Price variance | $fill in the blank 1 | Favorable |
Usage variance | $fill in the blank 3 | Unfavorable |
Labor Variances | ||
Rate variance | $fill in the blank 5 | Unfavorable |
Efficiency variance | $fill in the blank 7 | Favorable |
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