Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures.
|Direct materials (15 lbs. @ $4 per lb.)||$60|
|Direct labor (3 hrs. @ $16 per hr.)||48|
During June the company incurred the following actual costs to produce 8,300 units.
|Direct materials (127,400 lbs. @ $3.80 per lb.)||$||484,120|
|Direct labor (29,000 hrs. @ $16.15 per hr.).||468,350|
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
(1) Compute the direct materials price and
quantity variances. (Indicate the effect of each variance
by selecting for favorable, unfavorable, and no
(2) Compute the direct labor rate variance and the direct labor efficiency variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)
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