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Beary Company produces stuffed bears. Based on their history they typically use 3 pounds of material for each bear, costing $5 per pound. Each bear
Beary Company produces stuffed bears. Based on their history they typically use 3 pounds of material for each bear, costing $5 per pound. Each bear is expected to have direct labor of 1 hour at a rate of $9.50. In the month of January the company produced 150,000 bears. They had direct materials of 455,000 pounds, costing on average $4.95. Direct labor was 142,000 hours at an average wage of $10.
- Compute the Materials Price variance, Materials Usage variance and the Total Materials Variance
- Compute the Labor Rate Variance, Labor Efficiency Variance, and the total Labor Variance.
- Assume the company only investigates variances if they are $7,500 or more. Should they investigate? And if so, would the answer be different if they were to only look at the total variances?
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