Problem Seven

Controller Tri Nuygen is analyzing the direct material and direct labor variances for June. The following information comes from the accounting records. The product is a reinforcement bar used in construction.

Direct material cost for 575,000 lbs of material	$172,500
Pounds used in production	550,000 lbs
Direct labor costs for 230,000 hours	$4,140,000
Units produced	900,000
The standard cost for one bar is:
Direct materials: 0.5 lbs at $0.25 per lb
Direct labor 0.25 hours at $20 per hour

Required: Calculate (a) the direct-material price variance, the (b) direct-material quantity variance, (c) the direct-labor rate variance, and (d) the direct-labor efficiency variance.

Compute the following variances for June, and tell if they are favorable or unfavorable.

Amount Favorable/unfavorable

(a) Direct-material price variance ____________________ __________________

(b) Direct-material quantity variance ____________________ __________________

(c) Direct-labor rate variance ____________________ __________________

Direct-labor efficiency variance ____________________ __________________