OPQ Pharmaceuticals

Scenario: Analyze Cost Variances

Data:

• Standard Costs:
  • Direct Materials: $15 per unit
  • Direct Labor: $10 per unit
  • Variable Overhead: $5 per unit

• Actual Production:
  • Direct Materials Used: 20,000 units at $16 per unit
  • Direct Labor Costs: $210,000
  • Variable Overhead Costs: $90,000

Requirements:

1. Calculate the Direct Materials Price and Quantity Variances.
2. Calculate the Direct Labor Rate and Efficiency Variances.
3. Calculate the Variable Overhead Spending and Efficiency Variances.
4. Discuss the implications of these variances for OPQ Pharmaceuticals' cost control and performance evaluation.