Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (10 lbs. @ $3 per lb.) . $30 Direct labor (2 hrs. @ $12 per hr.) . $24 During June the company incurred the following actual costs to produce 9,000 units. Direct materials (92,000 lbs. @ $2.95 per lb.). $271,400 Direct labor (18,800 hrs. @ $12.05 per hr.). $226,540 Compute the (1) direct materials price and quantity variances and (2) direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 28P: Haversham Corporation produces dress shirts. The company uses a standard costing system and has set...
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Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it
manufactures. Direct materials (10 lbs. @ $3 per lb.) . $30 Direct labor (2 hrs. @ $12 per hr.) . $24 During June the company incurred the following actual costs to produce 9,000 units. Direct materials (92,000 lbs. @ $2.95 per lb.). $271,400 Direct labor (18,800 hrs. @ $12.05 per hr.). $226,540 Compute the (1) direct materials price and quantity variances and (2) direct labor rate and efficiency variances.
Indicate whether each variance is favorable or unfavorable.

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