?,

Inc. is a privately held furniture manufacturer. For August

20142014?,

DunnDunn

had the following standards for one of its? products, a wicker? chair:

	Standards per Chair
Direct materials	2 square yards of input at	$5.90	per square yard
Direct manufacturing labor	0.5 hour of input at	$10.90		per hour

The following data were compiled regarding actual

performance?:

actual output units? (chairs) produced,

2 comma 2002,200?;

square yards of input purchased and? used,

4 comma 1004,100?;

price per square? yard,

$ 6.00$6.00?;

direct manufacturing labor? costs,

$ 10 comma 434$10,434?;

actual hours of? input,

940940?;

labor price per? hour,

$ 11.10$11.10.

Read the requirements

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Requirement 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred.

?Let's begin by determining the formula used to calculate the actual costs of direct? materials, then enter the amounts in the formula and calculate the cost.

		x		=	Actual cost
Direct materials		x		=

Requirements

1.

Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred.

2.

Suppose 6 comma 6006,600 square yards of materials were purchased? (at $ 6.00$6.00 per square?yard), even though only 4 comma 1004,100 square yards were used. Suppose further that variances are identified at their most timely control? point; accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. Compute the price and efficiency variances under this approach.

Requirements 1 and 2