Claro 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:

During December, 78,000 pounds of material were purchased and used in production. There were 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. What are the advantages and disadvantages that can result from the use of a standard costing system?

Transcribed Image Text:

Direct materials (5 lbs. $0.90) Direct labor (1.5 hours $14.00 Standard prime cost 4.50 21.00 $25.50