MATERIALS AND LABOR VARIANCES At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products:

Direct materials (5 lbs. @ $4.00) $20.00 Direct labor (2 hrs. @ $11.25) 22.50 Standard prime cost per unit $42.50 The actual results for the year are as follows:

a. Units produced: 175,000.

b. Materials purchased: 930,000 pounds @ $4.10.

c. Materials used: 925,000 pounds.

d. Direct labor: 362,500 hours @ $11.15.

Required:

. Compute price and usage variances for materials.

. Compute the labor rate and labor efficiency variances.

Exercise