Ahmad Company developed the following standard costs for its product for 2022:

AHMAD COMPANY

Standard Cost Card

Cost Elements Standard Quantity Standard Price = Standard Cost

Direct materials 4 pounds $ 5 $20

Direct labor 2 hours 10 20

Variable overhead 2 hours 4 8

Fixed overhead 2 hours 2 4

$52

The company expected to work at the 120,000 direct labor hours level of activity and produce 60,000 units of product.

Actual results for 2022 were as follows:

• 56,800 units of product were actually produced.
• Direct labor costs were $1,092,000 for 112,000 direct labor hours actually worked.
• Actual direct materials purchased and used during the year cost $1,108,800 for 231,000 pounds.
• Total actual manufacturing overhead costs were $680,000.

Instructions:

Compute the following variances for Ahmad Company for 2022 and indicate whether the variance is favorable or unfavorable.

1. Direct materials price variance.

2. Direct materials quantity variance.

3. Direct labor price variance.

4. Direct labor quantity variance.