1 Problem 4: Direct Material and Direct Labor variances 2 3 Happy Garden Inc. manufactures big recycled pots in a small manufacturing facility 4 The pots are made from degradable plastic. Happy Garden has 55 employees 5 Each employee presently provides 38 hours of labor per week 6 Information about a production week is as follows: $15.00 8 Standard wage per hour 9 Standard labor time per unit 30 minutes 10 Standard number ol yards. of plastic per unit 1.5 yards 11 Standard price per yard of plastic $5.00 12 Actual price per yard of plastic $5.50 13 Actual yards of plastic used during the week 6,500 yards 14 Number of units produced during the week 5,000 units 15 Actual wage per hour $17.00 16 Actual hours for the week (55 employees * 38 hours) 2,090 hours 17 18 Required: 19 20 A. Determine the followings Material Variances and indicate if they are "favorable" or "unfavorable". 21 22 Direct Materials Price Variance: 23 24 25 Direct Materials Quantity Variance 26 27 28 Total Direct Materials Cost Variance 29 30 31 B. Determine the followings Labor Variances and indicate if they are "favorable" or "unfavorable" 32 33 Direct Labor Rate Variance: 34 35 36 Direct Labor Time Variance: 37 38 39 Total Direct Labor Cost Variance: 40 41 42 C. Write two possible reasons for favorable direct labor time (also known as officiency) variance. 43 46 Answer: 45 46 48