Question
The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it
The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes:
Direct materials: 4 gallons at $8 per gallon
Direct labor: 1 hour at $16 per hour
During July, the company made 6,000 units of product and incurred the following costs:
Direct materials purchased: 26,800 gallons at $8.20 per gallon
Direct materials used: 25,200 gallons
Direct labor used: 5,600 hours at $15.30 per hour
The direct materials purchases variance is computed when the materials are purchased.
Be sure to indicate Favorable or Unfavorable for variances
a. Material price variance was (amount and direction) ________________
b. Labor efficiency variance was (amount and direction) ________________
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