Exercise 4

During June, Fraser Company's material purchases amounted to 7,000 pounds at a price of $8 per pound. Actual costs incurred in the production of 3,000 units were as follows.

Direct labor$116,935($17,5 per hour)

Direct material.$34,496($8 per pound)

The standards for one unit of Fraser Company's product are as follows:

Direct Labor:Direct Material

Quantity, 2.5 hours per unitQuantity, 2.1 pounds per unit

Rate, $18 per hourPrice, $7.5 per pound.

Required: Compute the direct-material price and quantity variances, the direct-material purchase price variance and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.