The following information describes production civities of Mercer Manufacturing

Question

The following information describes production civities of Mercer Manufacturing for the year: Actual direct materials used Actual direct labor used Actual units produced 19,000 lbs. at $4.25 per lb 5,560 hours for a total of $107,308 30,090 Budgeted standards for each unit produced are 0.50 pounds of direct material at S4.20 per pound and 10 minutes of direct labor at $20.40 per hour. (1) Compute the direct materials price and quantity variances. (Do not round intermediate calculations.) Actual Cost Standard Cost (2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Do not round intermediate calculations.) Actual Cost Standard Cost

Explanation / Answer

1 Actual cost Standard cost AQ X AP AQ X SP SQ X SP 19000 X 4.25 19000 X 4.2 15045 X 4.2 80750 79800 63189 950 16611 Direct materials price variance 950 Unfavorable Direct materials efficiency variance 16611 Unfavorable Direct materials variance 17561 Unfavorable 2 Actual cost Standard cost AH X AR AH X SR SH X SR 5560 X 19.3 5560 X 20.4 5015 X 20.4 107308 113424 102306 6116 11118 Direct labor rate variance 6116 Favorable Direct labor efficiency variance 11118 Unfavorable Direct labor variance 5002 Unfavorable

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