2

The following information describes production activities of Mercer Manufacturing for the year:

Actual raw materials used	26,000 lbs. at $4.70 per lb.
Actual factory payroll	9,250 hours for a total of $185,000
Actual units produced	54,000

Budgeted standards for each unit produced are 0.50 pounds of raw material at $4.65 per pound and 10 minutes of direct labor at $21.00 per hour.

(1)	Compute the direct materials price and quantity variances