Reference no: EM132042060

Question - In early 2012, Duncan Manufacturing Inc. had budgeted for the production and sale of 20,000 units at a sales price of $25 per unit. The following information is available regarding the standard cost the each unit:

Direct Materials: $6.00 (3 pounds at $2.00 per lb)

Direct Labor: $3.50 (10 minutes of assembly at $.35 per minute)

Actual results for 2012 were determined to be as follows:

Number of units produced and sold: 18,000 units

Sales Revenue: $477,000 ($26.5 per unit)

Direct Materials cost: $199,925 (58,500 lbs purchased and used at $2.05 per lb)

Direct Labor Cost: $51,300 (171,000 minutes at $.30 per minute)

Sales Price Variance: 27,000 units

Direct Materials Price Variance: $2,925

Direct Materials Usage Variance: 9,000

Required: Compute each of the following variances. Indicate whether the variance is favorable or unfavorable.

A. Direct Labor Rate Variance

B. Direct Labor Efficiency Variance