Exercise 8-15 Direct materials and direct labor variances LO P2

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

Actual direct materials used	29,000 lbs. at $5.10 per lb.
Actual direct labor used	8,100 hours for a total of $164,430
Actual units produced	48,000

Budgeted standards for each unit produced are 0.50 pounds of direct material at $5.05 per pound and 10 minutes of direct labor at $22.00 per hour. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate (1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.