Johnson & Johnson uses standard costing. The standard costs for a product are as follows:
•Direct materials: 2 pounds @ $4 per pound
•Direct labor: 1 hour @ $20 per hour
During the month, 5,000 units were produced. Actual data:
•Direct materials used: 10,400 pounds @ $4.10 per pound
•Direct labor: 5,200 hours @ $19.50 per hour
Required:
1.Calculate the material and labor variances.
2.Explain possible reasons for the variances.