During January, Edu company material purchases amount to 6000 pounds at a price of $7.30 per pound. Actual cost incurred in the production of 2000 units were as follows.

Direct Labor ------------------------------------ $116,745 ($18.10 per hour)

Direct Material --------------------------------$30,660 ($7.30 per pound)

The standards for one unit of Edu Company product are as follows:

Direct Labor Direct material

Quantity, 3 hrs per unit Quantity, 2 pounds per unit

Rate, $18 per hours Price, $7 per pound

Required:

1) Compute the direct- material price and quantity variances

2) Compute the direct- labor rate and efficiency variances

3) Why is it necessary to perform variance analysis