Reference no: EM132988841
Question - The following standard costs were developed for Product A at Jim's Corporation. Budgeted production for the year is 20,000 units, and overhead is applied on the basis of direct labor hours.
The master budget is as follows:
Direct materials (50,000 feet × $14.00 per foot) $700,000
Direct labor (DL) (80,000 DL hours × $10.00 per hour) $800,000
Variable overhead (50,000 DL hours × $8.00 per hour) $400,000
Fixed overhead $700,000
Total budgeted cost $2,600,000
The following actual information is available for the production of Product A for the period:
Units produced: 9,750
Materials purchased: 39,000 feet @ $13.80 per foot
Materials used: 39,000 feet
Direct labor: 55,000 hours, costing $550,000
Variable overhead incurred: $450,000
Fixed overhead incurred: $750,000
Required - Calculate the dollar amount and label the following variances as "favorable" or "unfavorable":
-Direct materials price variance
-Direct materials efficiency variance
-Direct labor efficiency variance