Compute the total, price, and quantity variances for materials used and labor. Provide two possible explanations for each of the unfavorable variances calculated above, and suggest where responsibility for the unfavorable result might be placed.
The following direct materials and direct labor data pertain to the operations of Batista Manufacturing Company for the month of August.
Costs Quantities
Actual labor rate $13 per hour Actual hours incurred and used 4,250 hours
Actual materials Actual quantity of materials
price $128 per ton purchased and used 1,250 tons
Standard
materials price $130 per ton Standard quantity of
materials used 1,200 tons
Instructions:
a. Compute the total, price, and quantity variances for materials used and labor.
b. Provide two possible explanations for each of the unfavorable variances calculated above, and suggest where responsibility for the unfavorable result might be placed.