Problem #$10$: Processing Costing Problem #$10$: Processing Costing

UMPI's Potatoes produces ready$-$to$-$eat mashed potatoes for resale at food stores. UMPI expected to use $0\mathrm{.}40$ direct labor hours to

produce one unit $($batch$)$ of product at a cost of $$7\mathrm{.}50$ per hour. Actual results are in for the last year, which indicates $55,000$

batches of mashed potatoes were sold. The company's direct labor workforce worked $26,400$ hours at $$6\mathrm{.}50$ per hour.

Calculate the labor rate variance. Indicate if it is favorable or unfavorable to the company.

Calculate the labor efficiency variance. Indicate if it is favorable or unfavorable to the company.

Provide a logical reasoning for the materials price and quantity variances calculated in $1$ and $2.$

UMPI's Potatoes produces ready$-$to$-$eat mashed potatoes for resale at food stores. UMPI expected to use $0\mathrm{.}40$ direct labor hours to

produce one unit $($batch$)$ of product at a cost of $$7\mathrm{.}50$ per hour. Actual results are in for the last year, which indicates $55,000$

batches of mashed potatoes were sold. The company's direct labor workforce worked $26,400$ hours at $$6\mathrm{.}50$ per hour.

$1)$ Calculate the labor rate variance. Indicate if it is favorable or unfavorable to the company.

$2)$ Calculate the labor efficiency variance. Indicate if it is favorable or unfavorable to the company.

$3)$ Provide a logical reasoning for the materials price and quantity variances calculated in $1$ and $2.$