The following information describes production activities of Mercer Manufacturin

Question

The following information describes production activities of Mercer Manufacturing for the year: Actual raw materials used Actual factory payroll Actual units produced 23,000 lbs. at $4.40 per lb 6,580 hours for a total of $129,626 36,000 Budgeted standards for each unit produced are 0.50 pounds of raw material at $4.20 per pound and 10 minutes of direct labor at $20.70 per hour (1) Compute the direct materials price and quantity variances. (Round your answers to 2 decimal places.) Actual Cost Standard Cost S 4.40

Explanation / Answer

Direct Material Price Variance = (Standard Rate - Actual Rate) x Actual Quantity                                                              = ( 4.20 - 4.40) x 23000                                                              = 4600 Unfav Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) x Standard Rate                                                              = ( 36000 x 0.50 - 23000) x 4.20                                                              = 21000 Unfav

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