. Blue Hose Company employees a standard cost system for product costing. The standard cost of the product is the following: Raw Materials         2 lbs per unit at $6 per lb Labor         4 hours per unit at $12 per hour Actual direct material cost was $418,000 for 76,000 lbs of material used to manufacture 30,400 units in November. All materials purchased were used in November. Workers were paid $1,510,000 for 125,000 hours of work. Compute the price/rate, quantity/efficiency and flexible spending variances for direct materials and direct labor. Please label all variances. For the price and quantity/efficiency variances, explain what happened and then give a possible explanation as to why it happened. Please Answer With A Step By Step Solution

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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2. Blue Hose Company employees a standard cost system for product costing. The standard cost of the product is the following:

Raw Materials         2 lbs per unit at $6 per lb
Labor         4 hours per unit at $12 per hour

Actual direct material cost was $418,000 for 76,000 lbs of material used to manufacture 30,400 units in November. All materials purchased were used in November. Workers were paid $1,510,000 for 125,000 hours of work.

  1. Compute the price/rate, quantity/efficiency and flexible spending variances for direct materials and direct labor. Please label all variances.

  2. For the price and quantity/efficiency variances, explain what happened and then give a possible explanation as to why it happened.

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