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Question 4 (24 points) Rhodes Corporation manufactures a product with the following standard costs: Direct materials (20 yards @ $1.85 per yard) Direct labor
Question 4 (24 points) Rhodes Corporation manufactures a product with the following standard costs: Direct materials (20 yards @ $1.85 per yard) Direct labor (4 hours @ $12.00 per hour) $37.00 48.00 Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output). The following information pertains to July: Direct materials purchased (16,000 yards @ $1.80 per yard) Direct materials used (9,400 yards) Direct labor (1,880 hours @ $12.20 per hour) Actual production in July: 460 units Required: A. B. $28,800 22,936 Compute the following variances for the month of July, indicating whether each variance is favorable or unfavorable: 1. Materials purchase price variance = 16000x (1.80.1.85) 1234 2. Materials usage variance 1.85x (16000 - (20x500) = 1100 Labor rate variance 1880 (12.20-12)=376 3. 4. Labor efficiency variance 18 (1880-1840) = 480 $-800 Give potential reasons for each of the variances. Be sure to consider inter-relationships among variances.
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