Week 4 Chapter 7 Exercise 3 Variances for direct materials and direct labor

Banner Company manufactures flags of various countries. Each flag has a standard of eight square feet of fabric and three hours of direct labor time. Information about recent production activity follows.

 

 

Actual cost of fabric:                                     $4.50 per square foot

Fabric consumed:                                           32,080 square feet

Standard price per square foot of fabric:                   $4.25

Standard direct labor rate:                              $10.00 per hour

Actual direct labor rate:                                             $10.20 per hour

Actual labor hours worked:                            11,940

Actual production completed:                                    4,000 flags

 

a.       Compute the materials price variance and the materials quantity variance.

b.      Compute the labor rate variance and the labor efficiency variance.