Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each
Question:
Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:
_________________________Standard Quantity Standard Price
Direct materials........................2.5 pounds..................$3 per pound
Direct labor...............................0.6 hours...................$10 per hour
During March 2013, the following activity was recorded by the company relating to the production of tybos:
1. The company produced 9,000 units during the month.
2. A total of 24,000 pounds of materials were purchased at a cost of $66,000.
3. A total of 24,000 pounds of materials were used in production.
4. 5,000 hours of labor were incurred during the month at a total wage cost of $55,000.
Requirements:
Calculate the following variances for March for Riggins, Inc.
a. Materials price variance
b. Materials quantity variance
c. Labor price variance
d. Labor quantity variance
Step by Step Answer:
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer