Exercise 204

Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:

Standard QuantityStandard PriceDirect materials2.5 pounds$3 per poundDirect labor0.6 hours$10 per hour

During March 2016, the following activity was recorded by the company relating to the production of tybos:

1.The company produced 9,000 units during the month.2.A total of 24,000 pounds of materials were purchased at a cost of $66,000.3.A total of 24,000 pounds of materials were used in production.4.5,000 hours of labor were incurred during the month at a total wage cost of $55,000.

Calculate the following variances for March for Riggins, Inc.. Identify whether the variance is favorable or unfavorable?

$ favorable/unfavorable/not applicable

(a)Materials Price Variance

(b)Materials Quantity Variance

(c)Labor Price Variance

(d)Labor Quantity Variance