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P4. Arrowhead Company is a manufacturer of a single product, a picnic table. The following information pertains to standard costs and actual costs data
P4. Arrowhead Company is a manufacturer of a single product, a picnic table. The following information pertains to standard costs and actual costs data of the company in September. Accounts Quantity per unit Rate per unit Total costs per unit Direct Materials: Standard Actual 3 pounds 3.2 pounds $4/pound $4.1/pound $12 $13.12 Direct Labor: Standard 2 hours $25/hour $50 Actual 2.5 hours $22/hour $55 Variable MOH Standard 1.2 hour $4/hour $4.8 1 hour $4.5/ hour $4.5 Actual Arrowhead purchased 40,00 pounds of direct materials and used 32,000 pounds of them to make 10,000 tables in September. There was no beginning inventory of materials. Instructions: 1. Compute the following variances for September: a. Material price and quantity variances. b. Labor efficiency and rate variances. c. Variable overhead rate and efficiency variances. 2. Explain whether the variances above are favorable or unfavorable. 3. Explain plausible causes of each variance.
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