Materials and Labor Variances

At the beginning of the year, Craig Company had the following standard cost sheet for one of its plastic products:

Direct materials (5 lbs. @ $4.00) $20.00

Direct labor (2 hrs. @ $15.00) 30.00

Standard prime cost per unit $50.00

The actual results for the year are as follows:

Units produced: 500,000.

Materials purchased: 3,500,000 pounds @ $5.60.

Materials used: 3,100,000 pounds.

Direct labor: 900,000 hours @ $12.96.

Required:

1. Compute price and usage variances for materials. Enter amounts as positive numbers and identify if Favorable or Unfavorable.

Material price variance =

Material usage variance =

2. Compute the labor rate and labor efficiency variances. Enter amounts as positive numbers and identify if Favorable or Unfavorable.

Labor rate variance =

Labor efficiency variance =