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The Tachanka Company uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes: Direct materials 4 gallons at $8 per gallon
Direct labor 1 hour at $16 per hour
During July, the company made 6,000 units of product and incurred the following costs:
Direct materials purchased 26,800 gallons at $8.20 per gallon
Direct materials used 25,200 gallons
Direct labor used 5,600 hours at $15.30 per hour Required:
Problem 1: Compute the materials price and quantity variances for the month.
Problem 2: Compute the labor rate and efficiency variances for the month.
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