Botella Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles.The following standards for producing one case of bottles have been established:

Direct materials (4 lbs. @ $0.95) ..............$ 3.80

Direct labor (1.25 hours @ $15.00) ...........18.75

Standard prime cost .............................22.55

During December, 78,000 pounds of material were purchased and used in production. Therewere 15,000 cases produced, with the following actual prime costs:

Direct materials ...........................$ 74,000

Direct labor ...........$315,000 (for 22,500 hrs.)

Required:

1. Compute the materials variances.

2. Compute the labor variances.

3. CONCEPTUAL CONNECTION What are the advantages and disadvantages that can resultfrom the use of a standard costing system?