Chapter 10, Problem 6E

EXERCISE 10-6 Direct Materials and Direct Labor Variances LO10-1, LO10-2

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

	Standard Quantity or Hours	Standard Price or Rate	Standard Cost
Direct materials	4.6 pounds	$2.50 per pound	$11.50
Direct labor	0.2 hours	$18.00 per hour	$3.60

During the most recent month, the following activity was recorded:

1. Twenty thousand pounds of material were purchased at a cost of $235 per pound.
2. All of the material purchased was used to produce 4,000 units of Zoom.
3. 750 hours of direct labor time were recorded at a total labor cost of S 14,925.

Required:

1. Compute the materials price and quantity variances for the month.
2. Compute the labor rate and efficiency variances for the month.