MATERIALS VARIANCES Legumbre Company produces vegetable juices, sold in gallons. Recently, the company adopted the following material standard for one gallon of its tomato juice:

Direct materials 128 oz ð Þ¼ : @ $0:06 $7:68 During the first week of operation, the company experienced the following results:

a. Gallon units produced: 20,000.

b. Ounces of materials purchased and used: 2,600,000 ounces at $0.07.

c. No beginning or ending inventories of raw materials.

Required:

. Compute the materials price variance.

. Compute the materials usage variance.

Exercise