Standard cost summary; materials and labor cost variances LO_2,3 PGA Processors Inc. produces an average of 10,000 units each month. The factory standards are 20,000 hours of direct labor and 10,000 pounds of materials for this volume. The standard cost of direct labor is $9.00 per hour, and the standard cost of materials is $4.00 per pound. The standard factory overhead at this level of production is $10,000.

During the current month the production and cost reports reflected the following information:

On the basis of this information:
1. Prepare a standard cost summary.
2. Calculate the materials and labor cost variances, and indicate whether they are favorable or unfavorable, using the formulas on page 286.

Transcribed Image Text:

Beginning units in process None Units finished.. 9,500 Units in process, end of month.. None Direct labor hours worked 20,000 Pounds of materials used 9,400 Cost of direct labor... Cost of materials used. $178,000 $39,480