Fremont, Inc

question 4

Essay

Fremont, Inc., builds storage boxes to custom order. Materials include 20 board feet of lumber at $1.25/board foot. Standards call for 2 hours of labor at $15 per hour.
During March, 4,200 boxes were built. Materials purchased totaled $103,890 for 86,300 board feet of lumber. Actual lumber usage in production was 82,310 board feet. The March payroll was $139,360 for 9,150 hours.
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variance.
b. Compute the direct material efficiency variance.
c. Compute the direct labor rate variance.
d. Compute the direct labor efficiency variance.

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Definitions:

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Inventory Turnover Ratio

An asset management ratio that indicates how quickly inventory moves off the shelf and therefore how well a company sells its product.

Inventory Turns

Measures how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Dollar Amount

The numerical monetary value or total assigned to a transaction, account, or asset.