Chapter 10, Problem 39P

Orion Corporation has established the following standards for the prime costs of one unit of its chief product, dartboards.

During June, Orion purchased 160,000 pounds of direct material at a total cost of $304,000. The total wages for June were $42,000, 90 percent of which were for direct labor. Orion manufactured 19,000 dartboards during June, using 142,500 pounds of the direct material purchased in June and 5,000 direct-labor hours.

Required:

Compute the following variances for June, and indicate whether each is favorable or unfavorable.

1. 1. The direct-material price variance.
2. 2. The direct-material quantity variance.
3. 3. Direct-material purchase price variance.
4. 4. The direct-labor rate variance.
5. 5. The direct-labor efficiency variance.