Zippy Inc. manufactures a fuel additive, Surge, which has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month.

In connection with your examination of Zippy's financial statements for the year ended September 30, management has asked you to review some computations made by Zippy's cost accountant. Your working papers disclose the following about the company's operations: Standard costs per drum of product manufactured:

Materials

8 gallons of chemicals @ $2...............$16

1 empty drum..........................................1 $17

Direct labor-1 hour.................................. $ 8

Factory Overhead.................................... $ 6

Costs and expenses during September:

Chemicals: 645,000 gallons purchased at a cost of $1,140,000; 600,000 gallons used.

Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used.

Direct labor: 81,000 hours worked at a cost of $816,480. Factory overhead: $768,000.

Required:

Calculate the following variances for September using Excel Problem 8-3 format to answer (attached)

1. Materials quantity variance.

2. Materials purchase price variance.

3. Labor efficiency variance.

4. Labor rate variance.

I do not need the problem solved but just have a few questions regarding it. Thank you for all your help guys!!!

- I need Help finding how we got the $10.00/hr standard price/ rate for labor efficiency variance.

also

- To get the Surge 640,000 was it (80,000 * 8)

- To get the Empty Drum 80,000 was it (80,000 * 1)

- To get the Labor Efficiency variance 80,000 was it (80,000 * 1)

Actual 1. Materials quantity variance: Surge Empty drums 3. Labor efficiency variance 2. Materials purchase price variance: Surge Empty drums 4. Labor rate variance Standard Quantity or Hours $640,000 gal. $80,000 drums $80,000 hrs. Standard Cost /gal. /drum Quantity or Hours drums hrs. Actual Cost /drum $10.08 hr. Difference Difference Standard Cost $2.00 /gal. 1.00 /drum $10.00 hr. Actual Quantity or Hours gal drums hours Variance Variance