ABC inc. uses a standard cost system to account for its single product. Standards established for product comprise the following:
Materials ……………………..8lbs. @ $0.05/lb
Labor……………………………6hrs. @ $5.60/hr
The following operating data came from the records for the month:
In process, beginning inventory, none.
In process, ending inventory, 800 units, and 80% complete as to labor; material is issued at the beginning of processing.
Completed during the month, 5,600 units
Materials issued to production were 51,680 pounds @ $0.045 per pound.
Direct labor was $215,840 at a rate of $5.68 per hour.
Question 1) Compute the variances given below:
a. Net labor variance
b. Materials price
c. Net materials variance
d. Labor rate
e. Labor efficiency
f. Materials quantity