Variance analysis; material, and labor Trieste Toy Company manufactures LO 1 only one product, called Robot Ranger. The company uses a standard cost system and has established the following standards per unit of Robot Ranger.

During November, the following activity was recorded by the company for the production of Robot Ranger.
(1) The company produced 6000 units during the month.
(2) A total of 21,000 pounds of material were used, purchased at a cost of $241,500.
(3) The company employs 40 persons to work on the production of Robot Ranger. During November, each worked an average of 160 hours at an average rate of $16 per hour.
The company's management wishes to determine the efficiency of the ac¬ tivities related to the production of Robot Ranger.
REQUIRED

(a) For direct materials used in the product of Robot Ranger:
Compute the direct material price variance and the direct material use variance.

(b) The direct materials were purchased from a new supplier who is eager to enter into a long-term purchase contract. Would you recommend that Tri¬ este sign the contract? Explain.

(c) For direct labor employed in the production of Robot Ranger:
Compute the direct labor rate variance and the direct labor efficiency variance.

(d) In the past, the 40 persons employed in the production of Robot Ranger consisted of 16 experienced workers and 24 inexperienced assistants. During November, the company experimented with 20 experienced workers and 20 inexperienced assistants. Would you recommend that Tri¬ este continue the new labor mix? Explain.(LO 1)

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Direct materials Direct labor STANDARD QUANTITY 3.0 pounds 1.2 hours STANDARD PRICE STANDARD COST $12 per pound $36.00 15 per hour 18.00 $54.00