Problem Variances

Review Corporation has the following information available:

Budgeted direct labor rate: $27.00 per hour

Budgeted direct labor hours per unit 1.50 hours per unit

Budgeted direct materials rate $.80 per material

Budgeted direct materials per unit 2.50 direct materials per unit

Direct materials used 10,000

Actual price per direct material $1.20 per direct material

Direct labor hours used 8,000

Direct labor rate per hour $26.00 per hour

Actual units sold 5,100

Required

• Calculate the amounts requested below
• Answer the questions on the following page

What is the total budget for direct materials?
Calculate the actual amount spent for direct materials?
What is the total direct materials variance?
Is that variance favorable or unfavorable?
What is the direct materials price variance?
Is that variance favorable or unfavorable?
What is the direct materials efficiency variance?
Is that variance favorable or unfavorable?
What is the total budget for direct labor?
Calculate the actual amount spent for direct labor?
What is the total direct labor variance?
Is that variance favorable or unfavorable?
What is the direct labor price variance?
Is that variance favorable or unfavorable?
What is the direct labor efficiency variance?
Is that variance favorable or unfavorable?

Give specific reasons why the total direct materials variance was unfavorable.

Give specific reasons why the total direct labor variance was unfavorable.