Torres Company produces fruit juices, sold in litres. Recently, the company adopted the following material standard for one litre of its apple juice:
Direct materials (128 grams @ $0:05) 1⁄4 $6:40
During the first week of operation, the company experienced the following results:
a. Litre units produced: 20,000.
b. Grams of materials purchased and used: 2,600,000 grams at $0.06.
c. No beginning or ending inventories of raw materials.
Required:
1. Compute the materials price variance.
2. Compute the materials usage variance.