Problem 10-37 Variance Computation; Analysis of Performance and Responsibility (LO 10-1, 10-3)

Santa Rosa Industries uses a standard-costing system to assist in the evaluation of operations. The company has had considerable trouble in recent months with suppliers and employees, so much so that management hired a new production supervisor, Frank Schmidt. The new supervisor has been on the job for five months and has seemingly brought order to an otherwise chaotic situation. The vice president of manufacturing recently commented that . . . Schmidt has really done the trick. The change to a new direct-material supplier and Schmidts team-building/morale-boosting training exercises have truly brought things under control. The VPs comments were based on both a plant tour, where he observed a contented workforce, and a review of the following data, which was excerpted from a performance report:

Direct-material variances	$	2,100	Favorable
Direct-labor variances	$	6,470	Favorable

These variances are especially outstanding, given that the amounts are favorable and small. (Santa Rosas budgeted material and labor costs generally each average about $353,000 for similar periods.) Additional data follow.

• The company purchased and consumed 45,300 pounds of direct materials at $8.00 per pound, and paid $17.30 per hour for 21,200 direct-labor hours of activity. Total completed production amounted to 9,000 units.
• A review of the firms standard cost records found that each completed unit requires 4.5 pounds of direct material at $9.00 per pound and 2.9 direct-labor hours at $14.30 per hour.

Required: 2-a. Calculate the companys direct-material variances. 2-b. Calculate the companys direct-labor variances.

Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Reg 3 Req 4 Req5 Calculate the company's direct-material variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) Direct-material variances: Price variance: Quantity variance: Total direct-material variance: Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Reg 3 Reg 4 Reg 5 Calculate the company's direct-labor variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) Direct-labor variances: Rate Variance: Efficiency variance Total direct-labor variance: