Top Notch Music Inc. produces car stereos. During the year Top Notch Music produced 7,000 stereos. Materials and labor standards for producing these units are as follows:
Direct materials (1 electronic component kit @ $185)............185
Direct labor (8 hours @ $15)...................................................120
Required:
a. Compute the direct material price and usage variances. Electronic kits purchased and used were 7,100 kits at an actual price of $175 per kit.
b. Compute the direct labor rate and efficiency variances. 58,000 labor hours were used and the actual labor rate was $16 per hour.