Rhodes Corporation manufactures a product with the following standard costs: Direct materials (20 yards @ $1.85 per yard) $ 37.00 Direct labor (4 hours @ $12.00 per hour) 48.00 Variable factory overhead (4 hours @ $5.40 per hour)   21.60 Fixed factory overhead (4 hours @ $3.60 per hour) 14.40 Total standard cost per unit of output $121.00   Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output). The following information pertains to the month of July: Direct materials purchased (16,000 yards @ $1.80 per yard) $28,800 Direct materials used (9,400 yards)   Direct labor (1,880 hours @ $12.20 per hour) 22,936 Actual factory overhead 16,850 Actual production in July:  460 units

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Rhodes Corporation manufactures a product with the following standard costs:

Direct materials (20 yards @ $1.85 per yard)

$ 37.00

Direct labor (4 hours @ $12.00 per hour)

48.00

Variable factory overhead (4 hours @ $5.40 per hour)

  21.60

Fixed factory overhead (4 hours @ $3.60 per hour)

14.40

Total standard cost per unit of output

$121.00

 

Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output).

The following information pertains to the month of July:

Direct materials purchased (16,000 yards @ $1.80 per yard)

$28,800

Direct materials used (9,400 yards)

 

Direct labor (1,880 hours @ $12.20 per hour)

22,936

Actual factory overhead

16,850

Actual production in July:  460 units

 

 
 

 

Using the information above, compute the following variances for the month of July, indicating whether each variance is favorable or unfavorable:

  1. Materials purchase price variance
  2. Materials quantity variance
  3. Labor rate variance
  4. Labor efficiency variance
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