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Materials and Labor Variances

At the beginning of the year, Craig Company had the following standard cost sheet for one of its plastic products:

Direct materials (5 lbs. @ $4.00)	$20.00
Direct labor (2 hrs. @ $15.00)	30.00
Standard prime cost per unit	$50.00

The actual results for the year are as follows:

Units produced: 450,000.

Materials purchased: 3,150,000 pounds @ $5.80.

Materials used: 2,700,000 pounds.

Direct labor: 945,000 hours @ $13.32.

Required:

1. Compute price and usage variances for materials. Enter amounts as positive numbers and select Favorable or Unfavorable.

Material price variance	$___________
Material usage variance	$________

2. Compute the labor rate and labor efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable.

Labor rate variance	$ ________
Labor efficiency variance	$________

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3 .Labor Variances

Verde Company produces wheels for bicycles. During the year, 656,000 wheels were produced. The actual labor used was 368,000 hours at $9.10 per hour. Verde has the following labor standards: 1) $10.20 per hour; 2) 0.51 hour per wheel.

Required:

a. Compute the labor rate variance. $__________

b. Compute the labor efficiency variance. $