Question

The following information describes production activities of Mercer Manufacturing for the year. Actual direct materials used 24,000 lbs. at $4.45 per lb. Actual direct labor used 6,505 hours for a total of $128,799 Actual units produced 36,030 AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Budgeted standards for each unit produced are 0.50 pounds of direct material at $4.40 per pound and 10 minutes of direct labor at $20.80 per hour.

(1) Compute the direct materials price and quantity variances.

(2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Answer 1

Answer:

(1)

Compute the direct materials price and quantity variances. (Round your answers to 2 decimal places.)

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Explanation:

(1)

Standard quantity 30,060 units × 1/2 pound per unit = 15,030 pounds

(2)

Standard hours 30,060 units × 1/6 hour per unit = 5,010 hours

Actual rate per hour = $106,656/5,555 hours = $19.20

Explanation: