Eta Manufacturing

Scenario: Evaluate Standard Costs

Data:

• Standard Costs:
  • Direct Materials: $8 per unit
  • Direct Labor: $12 per unit
  • Variable Overhead: $5 per unit

• Actual Costs:
  • Direct Materials: $9 per unit
  • Direct Labor: $11 per unit
  • Variable Overhead: $4 per unit

Requirements:

1. Calculate the direct materials price and quantity variances.
2. Calculate the direct labor rate and efficiency variances.
3. Calculate the variable overhead spending and efficiency variances.
4. Discuss the implications of the variances for Eta Manufacturing's cost control efforts.
5. Recommend actions to improve cost performance based on the variance analysis.