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7.- Materials and Labor Variances At the beginning of the year, Craig Company had the...

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Accounting

7.-

Materials and Labor Variances

At the beginning of the year, Craig Company had the following standard cost sheet for one of its plastic products:

Direct materials (5 lbs. @ $4.00) $20.00
Direct labor (2 hrs. @ $15.00) 30.00
Standard prime cost per unit $50.00

The actual results for the year are as follows:

  1. Units produced: 410,000.
  2. Materials purchased: 2,870,000 pounds @ $4.70.
  3. Materials used: 2,501,000 pounds.
  4. Direct labor: 902,000 hours @ $12.84.

Required:

1. Compute price and usage variances for materials. Enter amounts as positive numbers and select Favorable or Unfavorable.

Material price variance $fill in the blank 1
FavorableUnfavorable
Material usage variance $fill in the blank 3
FavorableUnfavorable

2. Compute the labor rate and labor efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable.

Labor rate variance $fill in the blank 5
FavorableUnfavorable
Labor efficiency variance $fill in the blank 7

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