Question
Chemical, Inc., has set up the following standards per finished unit for direct materials and direct manufacturing labor: Direct materials: 10 lbs. at $3 per
Chemical, Inc., has set up the following standards per finished unit for direct materials and direct manufacturing labor:
Direct materials: 10 lbs. at $3 per lb. = $30.00
Direct manufacturing labor: 0.5 hours at $20 per hour= $10.00
The number of finished units budgeted for March 2020 was 10,000; 9,810 units were actually produced.
Actual results in March 2020 were:
Direct materials: 98,073 lbs used
Direct manufacturing labor: 4,900 total hours at a total cost of $102,900
Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 100,000 lbs. at a total cost of $310,000.
Compute the March 2020 price and efficiency variances of direct materials and direct manufacturing labor.
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