Controller Mindy Bricher is analyzing the direct material and direct labor variances for 2008. He asks you to prepare a memo outlining what to investigate and why.
The following information comes from the accounting records:
Direct Material Cost (for 600,000 pounds of material) ....................$180,000
Units used ...............................................................................550,000 pounds
Direct Labor Costs (for 270,000 hours) ........................................$3,780,000
Units Produced ...............................................................................1,000,000
The Standard prime cost for one bar is:
Direct Materials 0.5 pounds at $0.25 per pound ................................$0.125
Direct Labor 0.25 hours at $15 (per hour) .........................................$3.750
Total Standard prime cost per bar ......................................................$3.875
 
1.  Compute the appropriate direct material and direct labor variances
2. Prepare a memo outlining what items should be investigated and why.