Analysis of materials and labor variances}

DIY Products Company manufactures a variety of products made of plastic and aluminum components. During the winter months, substantially all of the production capacity is devoted to the production of lawn sprinklers for the following spring and summer seasons. Other products are manufactured during the remainder of the year.

The company has developed standard costs for its several products. Standard costs for each year are set in the preceding October. The standard cost of a sprinkler for the current year is \(\$ 3.70\), computed as follows:

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Direct materials: Aluminum: 0.2 lb. $0.40/lb. Plastic: 1.0 lb. @ $0.38/lb. Production labor: 0.3 hr. @ $8.00/hr. Factory overhead Total $0.08 0.38 2.40 0.84 $3.70 During February, DIY Products manufactured 8,500 good sprinklers. The company incurred the following costs, which it charged to production: Materials requisitioned for production: Aluminum: 1,900 lbs. @ $0.40/lb. Plastic: Regular grade-6,000 lbs. @ $0.38/ib. Low grade-3,500 lbs. @$0.38/lb.... Production labor: 2,700 hrs. @ $8.60/hr. Factory overhead Costs charged to production $ 760 2,280 1,330 23,220 7,140 $34,730