Reference no: EM132743092

Question - Pyre Mills, Inc. is a large producer of men's and women's clothing. The company uses a standard costing system. The standard costs and actual costs per unit for one of the company's products are as follows:

Direct material:

Standard: 4.0 metres at $5.40 per metre

Actual: 4.4 metres at $5.05 per metre

Direct Labour:

Standard: 1.6 hours at $6.75 per hour

Actual: 1.4 hours at $7.30 per hour

During this period, the company produced 4,800 units of the product.

At the beginning of the period, no inventory of materials was on hand. During the period, 21,120 metres of materials were purchased, all of which were used in production.

Required -

1. For direct materials, compute the price and quantity variances for the period.

2. For direct labour, compute the rate and efficiency variances for the period.

3. Provide a reasonable explanation for the direct labour efficiency variance.