Question:
(DM & DL variances) In July 2010, Zinger Corp. purchased 20,000 gallons of Numerol for $61,000 to use in the production of product #43MR7. During July, Zinger Corp. manufactured 3,900 units of product #43MR7. The following information is available about standard and actual quantities and costs:
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Standard for One Unit
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Actual Usage for July
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Direct material
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4.8 gallons @ $3 per gallon
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18,350 gallons
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Direct labor
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20 minutes @ $9 per DLH
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1,290 DLHs @ $9.02 per DLH
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a. Compute the material purchase price variance and the material quantity variance.
b. Compute the labor rate, labor efficiency, and total labor variance.