DirectMaterials Direct Labor Actual price per unit of input (lb andhr) $7.80 $12

Question

                                                                   DirectMaterials                Direct Labor

Actual price per unit of input (lb andhr)           $7.80                            $12.00

Standard price per unit ofinput                        $7.00                            $12.75

Standard inputs allowed per unit ofoutput          10                                   2

Actual units ofinput                                        115,000                         30,000

Actual units of output(product)                        14,400                           14,400

1. Compute the price, quantity, and flexible-budget variancesfor direct materials and direct labor.

Use U or F to indicate whether the variances are unfavorable orfavorable.

2. Prepare a plausible explanation for the performance.

Explanation / Answer

Calculate price, quantity, and flexible-budget variances for bothdirect materials and direct labor first and then use the results tomark them U and F. Then you can plausibly explain theperformance. For full answer goto http://tinyurl.com/3variances

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