DIRECT COST VARIANCES

Data: Smith Company has the following standards to produce one unit of finished product. Direct materials: 3 pounds at $5 per pound Direct Labor: 4 hours at $15 per hour The Smith Company produced 5,000 products during the period. Direct material used in production equals 15,200 lbs. The direct labor workers worked 19,700 hours.

Required: Calculate the direct material quantity variance and the direct labor efficiency variance. Indicate if each is favorable or unfavorable.