Problem:
Sanders Industries, Inc., developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.
Standard quantity Standard price
Direct materials 0.20 pounds $25 per pound
Direct labor 0.10 hours $15 per hour
During July, Sanders produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
1. Determine what is July's direct labor efficiency variance.
2. Determine what is July's direct labor rate variance.
3. Determine July's direct labor planning variance.