Question

The following describes production activities of Mercer Manufacturing for the year.

Actual direct materials used	33,000 lbs. at $5.90 per lb.
Actual direct labor used	10,700 hours for a total of $221,490
Actual units produced	63,000

Budgeted standards for each unit produced are 0.50 pound of direct material at $5.85 per pound and 10 minutes of direct labor at $21.70 per hour.

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 and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.)
(2) Compute the direct labor rate and efficiency variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)

Please show work and list formulas used. Thank you.

Answer 1