Tercer reports the following for one of its products.

Direct materials standard (4 lbs. @ $2 per lb.)

$

8

per finished unit

Actual direct materials used (AQ)

300,000

lbs.

Actual finished units produced

60,000

units

Actual cost of direct materials used

$

535,000

AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price

Compute the direct materials price and quantity variances and classify each as favorable or unfavorable.

Actual Cost			0				0	Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
	x	0			x				x
			$0	0			$0
				$0
				0