Hernandez Corporation uses a standard cost system and has established the following standards for one unit of product:
|
Standard
Quantity
|
Standard
Price
|
Standard
Cost
|
| Direct materials |
10 pounds
|
$2.60 per pound
|
$26.00
|
| Direct labor |
.25 hour
|
$10.00 per hour
|
2.50
|
|
|
|
$28.50
|
|
|
|
|
During October, the company purchased 240,000 pounds of material at a total cost of $588,000. The total factory wages for October were $49,400. During October, 21,000 units of product were manufactured using 211,000 pounds of material and 5,200 direct labor hours. Material quantity and price variances are recorded when materials are used.
| a. |
Compute the material quantity and labor efficiency variances. |
| b. |
Compute the material price and labor rate variances. |
|
|
Show whether each of the above variances was either favorable or unfavorable.