51. (Standard costing) One of the products made by Factory Logistics is a robotic conveyor system. A single model (Model No. 89) accounts for approximately 60 percent of the company’s annual sales. Because the company has produced and expects to continue to produce a significant quantity of this model, the company uses a standard costing system to account for Model No. 89 production costs. The company has a separate plant that is strictly dedicated to Model No. 89 production. The standard costs to produce a single unit follow:

Direct material (7,000 pounds) $14,000 Direct labor 430 hours at $20.00 per hour 8,600 Overhead 19,000 Total standard cost $41,600 For the 200 units of Model No. 89 produced in 2002, the actual costs were Direct material (1,500,000 pounds) $2,900,000 Direct labor (89,200 hours) 1,739,400 Overhead 3,700,000 Total actual cost $8,339,400

a. Compute a separate variance between actual and standard cost for direct material, direct labor, and manufacturing overhead for the Model No. 89 units produced in 2002.

b. Is the direct material variance found in part

(a) driven primarily by the price per pound difference between standard and actual or the quantity difference between standard and actual? Explain.