Megham Company manufactures a single product. The following standards have been developed for it:

Direct Material 6 pounds $ 4 /pound

Direct Labor 2 hours $ 15 /hour

During May, the following actual activities occurred:

Material purchased, 12,000 pounds for $45,600;

material used in the production of 2,000 units of product, 13,000 pounds;

direct labor, 3,500 hours costing $56,000.

Required:

(1) Compute the following variances: 

(a) material quantity variance.

(b) labor rate variance.

(c) labor efficiency variance.

(2) Give one possible explanation for each of the 3 variances computed.

Answer rating: 100% (QA)

Materials Quantity Variance SQAQ SP 20006 ... View the full answer