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Tree Company produces a single product. The accountant has provided the following standard cost information per unit: Variable Standard cost of one unit: Material 5
Tree Company produces a single product. The accountant has provided the following standard cost information per unit: Variable Standard cost of one unit: Material 5 pounds at $4 per pound 20 per product Labor 6 hours at $10 per hour 60 per product Variable Overhead 6 hours at $12 per hour $ 72 per product Total Standard Cost Per Product $ 152 During January, the following actual activity was recorded by the company relative to production of the product. Actual: Produced 1,000 units. Purchased 6,000 pounds of material @ $3.90 per pound. ($23, 400) Worked 6.500 direct labor hours @ a cost of S$.50 per hour. ($61.750) Incurred variable manufacturing overhead costing a total of $74, 750 for the month. Required: Compute the following variances for January: a. Direct materials price and quantity variances. b. Direct labor rate and efficiency variances. Look at the two labor variances that you computed in (1b) above. Explain to the owner any logical causes for these variances
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