Exercise
Direct materials and direct labor variances
Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures.
Direct materials (15 lbs. @ $4 per lb.) $60
Direct labor (2 hrs. @ $16 per hr.) 32
During June the company incurred the following actual costs to produce 8,900 units.
| Direct materials (136,800 lbs. @ $3.80 per lb.) |
|
$ |
519,840 |
|
| Direct labor (22,300 hrs. @ $16.10 per hr.). |
|
|
359,030 |
|
(1) Compute the direct materials price and quantity variances.