Question
Akron Chemical Company manufactures Rexide, a product used in the plastics industry. The company prepares its budget on the basis of standard costs. The budgeted
Akron Chemical Company manufactures Rexide, a product used in the plastics industry. The company prepares its budget on the basis of standard costs. The budgeted production in January was 1,300 units. The following data are for January:
Actual results:
Direct material purchased 5,200 kilograms at $1.19 per kilogram
Direct material used 4,700 kilograms
Direct labor 7,400 hours at $15.25 per hour
Units produced 1,200 units
Standards for one unit of Rexide:
Direct material 4 kilograms at $1.10 per kilogram
Direct labor 6 hours at $15 per hour
Required:
Compute the following variances and determine whether they are favorable or unfavorable:
- (15 points) Direct material variances: price, quantity, and material inventory variances
- (10 points) Direct labor variances: rate and efficiency variances
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