Exercise 21-15 Direct materials and direct labor variances LO P3

The following describes production activities of Mercer Manufacturing for the year.

Actual direct materials used	24,000 lbs. at $4.45 per lb.
Actual direct labor used	6,505 hours for a total of $128,799
Actual units produced	36,030

Budgeted standards for each unit produced are 0.50 pound of direct material at $4.40 per pound and 10 minutes of direct labor at $20.80 per hour. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price

(1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.) (2) Compute the direct labor rate and efficiency variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)