Direct cost variance analysis

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Reference no: EM13877235

Problem 2: Direct Cost Variance Analysis (30 points total)

Ken Co. uses standard costing for accounting. Following is the standards for production of its only product:

Direct material: 18 pounds at $25 per pound

Direct labor: 6 hours at $18 per hour.

During March company records showed the following:

Material purchased: 16,000 pounds at a cost of 352,000

Material used: 15,000 pounds

Direct labor hours: 4,700 hrs at a cost of $21.00 per hrs

Units produced: 800 units

Compute the direct labor efficiency and price variances.
Compute the direct material efficiency and price variances.
Explain how a favorable direct material price variance may be related to an unfavorable direct material efficiency variance.

Reference no: EM13877235

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