Exercise 10-50 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:

a. Units produced: 410,000.

b. Materials purchased: 2,075,000 pounds @ $3.95.

c. Materials used: 2,100,000 pounds.

d. Direct labor: 825,000 hours @ $14.85.

Required:

1. Compute price and usage variances for materials.

2. Compute the labor rate and labor efficiency variances, using both the formula and columnar approaches