Metalworks, Inc., produces castings for various applications in the plumbing industry. Beo cause the industry is mature, standardized products with known materials and labor requirements are the primary revenue generators for the company. The following information has been assembled for the month of January:

Calculate each of the following for Faucet Value No. 337 and determine whether the variance is favorable or unfavorable:

a. materials price variance

c. labor rate variance

b. materials quantity variance

d. labor efficiency variance How might management determine whether a variance is significant and worthy of investigation? Explain.

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Materials Labor Materials Labor Standard resource consumption per batch of Faucet Value No. 337 500 lbs. at $2.50 per pound 40 hours at $11.00 per hour Actual resource consumption 530 lbs. at $2.10 per pound 45 hours at $14.00 per hour