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Question - Broadside Boat manufactures small recreational boats. They specify 40 lbs. of fiberglass glass mix per hull at a standard cost of $.75 per pound. During the recent period they produced 430 boats. Broadside purchased and used 17,500 pounds of fiberglass mix to make the glass boats. They paid an average of $.80 per pound for the fiberglass mix.
The standard direct labor time specified per boat for mixing is 0.5 hours, and the specified standard labor rate is $12 per hour. The actual direct labor hours for the month are 210 hours and the direct labor cost incurred for the mixing process to make 430 boats during the month was $2,625.
Required - Reference the data from Broadside Boat stated above. Compute the material usage/efficiency variance and indicate if the variance is favorable or unfavorable.
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