The following information describes production activities of

The following information describes production activities of Mercer Manufacturing for the year. Actual direct materials used Actual direct labor used Actual units produced 19,000 lbs. at $4.25 per lb 5,560 hours for a total of $187,308 30,090 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 produede 0.50 pounds of direct material at $4.20 perpound and 10 minutes of direct labor at $20.40 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. Complete this question by entering your answers in the tabs below Required Required 2 Compute the direct materials price and quantity variances. (Do not round intermediate calculations.) Actual Cost Standard Cost 907 AM 6/18/2018 arch

Solution

Solution 1:

Direct material price variance = $950 U

Direct material quantity variance = $16,611 U

Direct material cost variance = $950 U + $16,611 U = $17,561 U

Solution 2:

Direct labor rate variance = $6,116 F

Direct labor efficiency variance = $11,118 U

Direct labor cost variance = $6,116 F + $11,118 U = $5,002 U

Direct Material Cost Variance
Actual Cost		Standard cost for actual quantity		Standard Cost
AQ *	AP =			AQ *	SP =			SQ *	SP =
19000	$4.25	$80,750.00		19000	$4.20	$79,800.00		15045	$4.20	$63,189.00
	$950 U				$16,611 U
			Direct Material Price Variance				Direct Material Qty variance