# Question

The following information describes production activities of Mercer Manufacturing for the year:
Actual raw materials used . . . . . . . . . 16,000 lbs. at \$ 4.05 per lb.
Actual factory payroll . . . . . . . . . . . . . 5,545 hours for a total of \$ 105,355
Actual units produced . . . . . . . . . . . . 30,000
Budgeted standards for each unit produced are 0.50 pounds of raw material at \$ 4.00 per pound and 10 minutes of direct labor at \$ 20 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.

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