The following data were compiled regarding actual

performance:

actual output units (chairs) produced,

2,000;

square yards of input purchased and used,

3,700;

price per square yard,

$5.40;

direct manufacturing labor costs,

$10,192;

actual hours of input,

980;

labor price per hour,

$10.40.

i Data Table -X Direct materials Direct manufacturing labor Standards per Chair 2 square yards of input at $ 5.20 per square yard 0.5 hour of input at $ 10.60 per hour i Requirements -X 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. 2. Suppose 6,000 square yards of materials were purchased (at $5.40 per square yard), even though only 3,700 square yards were used. Suppose further that variances are identified at their most timely control point, accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. Compute the price and efficiency variances under this approach. Print Done Requirement 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. Let's begin by determining the formula used to calculate the actual costs of direct materials, then enter the amounts in the formula and calculate the cost Actual cost Direct materials X Next we will calculate the actual input at the budgeted price. Actual input Direct materials Direct manufacturing labor Budgeted price Cost Determine the formula and calculate the costs for the flexible budget. Flexible budget cost Direct materials Direct manufacturing labor Now compute the price and efficiency variances for direct materials and direct manufacturing labor, Label each variance as favorable (F) or unfavorable (U). Efficiency Price variances variances Direct materials Direct manufacturing labor