Reed Corp. has set the following standard direct materials and direct labor cost

Question

Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (16 lbs. $4 per lb. Direct labor (4 hrs. « $15.00 per hr.) 60 During June the company incurred the following actual costs to produce 8,900 units. Direct materials (145,000 lbs. $3.75 per 1b.) Direct labor (38,800 hrs. $15.15 per hr.) $543,750 587,820 AQ Actual Quantity SQ Standard Quantity AP Actual Price SP Standard Price AH-Actual Hours SH Standard Hours AR Actual Rate SR Standard Rate (1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable

Explanation / Answer

REQUIRED 1

REQUIRED 2

Actual cost Standard cost AQ * AP AQ * SP SQ * SP 145,000 * 3.75 145,000 * 4 142,400 (8,900*16) * 4 543,750 580,000 569,600 36,250 10,400

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