(Direct material and direct labor variances) Lisa Scamponi Ltd. produces evening bags. In December 1996, Ms. Scamponi, president of the company, received the following information from Antonio Buffa, the new controller, in regard to No¬ vember production:

Ms. Scamponi asked Mr. Buffa to provide her with the following specific information:

a. The standard quantity of material allowed for November production

b. The standard direct labor hours allowed for November production

c. The material price variance

d. The labor efficiency variance

e. The standard prime (direct material and direct labor) cost to produce one bag

f. The actual cost to produce one bag in November g. An explanation for the difference between standard and actual cost. Be sure the explanation is consistent with the pattern of the variances.LO1

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Production during month Actual cost of material purchased and used Standard material allowed Material quantity variance Actual hours worked Standard labor time per handbag Labor rate variance Standard labor rate per hour Standard price per yard of material 1,200 handbags $4,767.18 1/3 square yard per bag $594 U 2,520 2 hours $630 F $7 $8