The following information describes production activities of Mercer Manufacturin

Question

The following information describes production activities of Mercer Manufacturing for the year. Actual direct materials used Actual direct labor used Actual units produced 16,e00 lbs. at $4.85 per lb. 5,545 hours for a total of $1e5,355 30,800 Budgeted standards for each unit produced are 0.50 pounds of direct material at $4,00 per pound and 10 rminutes of direct labor at $20 per hour AQ Actual Quantity SQ Standard Quantity AP Actual Price SP Standard Price AH Actual Hours SH - Standard Hours AR Actual Rate SR Standard Rate (1) Compute the direct materials price and quantity variances (2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable

Explanation / Answer

Direct materials Actual cost Standard cost AQ * AP AQ * SP SQ * SP 16,000 * 4.05 16000 * 4 15000 * 4 64800 64000 60000 800 4000 direct materials price variance 800 U direct materials qty variance 4000 U total direct materials variance 4800 U Direct labor Direct labor Actual cost Standard cost AH * AR AH * SR SH * SR 5,545 * 19 5545 * 20 5000 * 20 105355 110900 100000 5545 10900 direct materials price variance 5545 F direct materials qty variance 10900 U total direct materials variance 5355 U

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