10-33 (2)

Problems

New Jersey Valve Company manufactured 7,800 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following:

Direct labor.40,100 hr at $14 60 per hr

Direct material purchased. 25,000 lb at $2 60 per lb

Direct material used.. 23,1001b

The control valve has the following standard prime costs:

Direct material 3 lb at $2 50 per lb.. $7.50

Direct labor 5 hr at $15 00 per hr.. 75.00

Standard prime cost per unit. $82.50

2. For the month of January, compute the following variances, indicating whether each is favorable or unfavorable.

a. Direct-material price variance.

b. Direct-material quantity variance.

c. Direct-material purchase price variance.

d. Direct-labor rate variance.

e. Direct-labor efficiency variance.