Cost Management: RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive, and RJM has seen its profits fall in recent years, including an operating loss of $19,800 last year. RJM was able to turn that around this year by aggressively cutting costs. The summarized financial results for RJM are shown below:

	Current Year				Prior Year
Gross sales:	$	940,700			$	1,340,009
Less variable costs
Direct materials		528,428				785,180
Direct labor		220,860				496,629
Total contribution margin	$	191,412			$	58,200
Fixed cost		33,509				78,000
Operating income	$	157,903			$	(19,800	)

Jim Green, the management accountant at RJM, is analyzing the companys performance for this year in order to explain to management the specific aspects that drove the company to success. Some of the information Jim obtained follows:

	Current Year				Prior Year
Sales units		40,900				47,300
Price	$	23.00			$	28.33
Direct materials cost per unit of material	$	7.60			$	8.30
Direct materials required per unit		1.70				2.00
Direct labor required per unit		0.60				0.75
Wage rate ($/hour)	$	9.00			$	14.00

Assume that RJM, for efficiency and to reduce cost, maintains little or no direct materials or work-in-process inventory.

Required: F/U as well.

1. Determine the selling price variance for the current year based on sales dollars. Determine the sales volume variance based on contribution margin.

2. Determine the following variable cost variances:

a. The usage and price variances for direct materials.

b. The efficiency and rate variances for direct labor.

1.	Selling price variance in sales dollars
	Sales volume variance in contribtion
2a.	Materials usage variance
	Materials price variance
2b.	Labor usage variance
	Labor rate variance