Marcia has established unit standards and a weekly budget for its planned production of 1000 units as follows:
Budget.................... Per Unit.. Weekly
Direct materials (4 pounds at $10 per pound)$40 $40,000
Direct labor (3 hours at $5.50 per hour)16.50........16,500
Variable overhead (3 hours at $2 per hour)..6.00......6,000
Fixed overhead (3 hours at $8 per hour) 24.00......24,000
Total $86.50 $86,500
For the week in question, Marcia actually produced 1,050 units. In doing so, she purchased 4,000 pounds of material at a cost of $41,000 and used 4,100 pounds of materials. Direct laborers worked 3,000 hours and were paid $16,950. Variable overhead amounted to $6,300 and fixed overhead was $25,000.
Required: Calculate the variances as request below. Be sure to label each variance as to whether it is favorable or unfavorable.
1. Direct materials price variance
2. Direct materials quantity(usage) variance
3. Direct labor rate(price) variance
4. Direct labor efficiency (usage) variance