Reference no: EM132971597

Zee Corporation has developed the following cost standards for the production of its leather backpacks: 

Standard Cost Per Backpack Leather (2.1 yards × $24 per yard)$50.40

Direct labor (2.4 hours × $9.00 per hour)$21.60

Variable overhead (2.4 hours × $15.20 per hour)$36.48

Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows:

Number of backpacks produced 13,000

Direct labor hours incurred30,380

Yards of leather purchased28,980

Yards of leather used in production28,410

Cost of leather purchased$646,254

Direct labor cost$232,407

Variable overhead cost$472,409

The direct materials purchases variance is computed when the materials are purchased.

Required:

Problem 1: Compute the following variances for Zee.

a. Materials price variance.

b. Materials quantity variance.

c. Labor efficiency variance.

d. Variable overhead rate variance.