Jack Company manufactures a single product that has a standard materials cost of $40 (4 units of raw materials at $10 per unit) and standard direct labor cost of $18 (1 hour per unit).

The following data pertain to operations for May of this year:

Raw materials purchased

6,200 units costing $63,240

Raw materials used to produce 1,500 units

6,200 units of raw materials

Direct labor used

1,500 hours costing $30,000

Compute the following variances (show calculations):

1. Materials price variance

2. Materials quantity variance

3. Labor rate variance

4. Labor efficiency variance

Give explanations for each of the 4 variances computed above.

Variance Calculations	Variance Answer	Favorable or Unfavorable	Possible explanation for variance outcome
1. Direct matierials price variance
AP AQ SP AQ
2. Direct materials quantity variance
SP AQ SP SQ
3. Direct labor rate variance
AR AH SR AH
4. Direct Labor efficiency variance
SR AH SR SH