Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each
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Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:
Standard Quantity | Standard Price | |
Direct materials | 2.5 pounds | $3 per pound |
Direct labor | 0.6 hours | $10 per hour |
During March 2013, the following activity was recorded by the company relating to the production of tybos:
1. | The company produced 9,000 units during the month. |
2. | A total of 24,000 pounds of materials were purchased at a cost of $66,000. |
3. | A total of 24,000 pounds of materials were used in production. |
4. | 5,000 hours of labor were incurred during the month at a total wage cost of $55,000. |
Calculate the following variances for March for Riggins, Inc.. Identify whether the variance is favorable or unfavorable?
(a) | Materials Price Variance | $ | FavorableNot ApplicableUnfavorable |
(b) | Materials Quantity Variance | $ | UnfavorableFavorableNot Applicable |
(c) | Labor Price Variance | $ | UnfavorableFavorableNot Applicable |
(d) | Labor Quantity Variance | $ | Not ApplicableFavorableUnfavorable |
Related Book For
Management Leading And Collaborating In A Competitive World
ISBN: 9781265051303
15th International Edition
Authors: Thomas S Bateman, Scott A Snell, Robert Konopaske
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