Variance Analysis

Mercer's Manufacturing has the following standard (budgeted) costs for one unit of its product.

Direct materials (6 feet @ $5 per foot) $30

Direct labor (1.5 hours @ $10 per hour) 15

During the most recent year, the following actual results were recorded:

Production 12,000 units

Direct materials (71,750 ft. purchased & used) $ 361,620

Direct labor (17,900 hours) $ 182,580

a) Direct materials price and usage (efficiency/ volume) variances

b) Direct labor rate and efficiency variances