Variance Analysis (Material and Labor):

Company ABC had the following actual and standard costs for the month of August:

• Actual Material Cost: $18,000
• Standard Material Cost: $15,000
• Actual Labor Cost: $14,000
• Standard Labor Cost: $12,000

Requirements:

1. Calculate the material price variance.
2. Compute the labor rate variance.
3. Discuss possible causes of the variances and suggest corrective actions.