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Calculate the labor rate and labor efficiency variances
Course:- Managerial Accounting
Reference No.:- EM13939161




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MATERIALS AND LABOR  VARIANCES

At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products:

Direct materials (5 lbs. @ $4.00)

$20.00

Direct labor (2 hrs. @ $11.25)

  22.50

Standard prime cost per unit

$42.50

The actual results for the year are as follows:

a. Units produced: 175,000.

b. Materials purchased: 930,000 pounds @ $4.10.

c. Materials used: 925,000 pounds.

d. Direct labor: 362,500 hours @ $11.15.

Required:

1. Compute price and usage variances for materials.

2. Compute the labor rate and labor efficiency variances.




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