The Data Below Relate to a Product of Omaha Company

question 64

Essay

The data below relate to a product of Omaha Company.
$\begin{array}{lrr}\text { Standard costs }\\ \text {Materials, 3 pounds at \( \$ 7 \) per pound } & \text {\$21 per unit}\\ \text { Labor, 4 hours at \( \$ 18 \) per hour } & \text {\$72per unit}\\ \text {Budgeted production for the year } & \text {2,000units}\\ \text { Actual results were:} &\\ \text { Production } & 1,800 \text {units } \\ \text { Material purchases, 6,000 pounds} &\$48,230\\ \text { Labor, 7,420 hours } &\$140,170\\ \text {Material used in production } & 5,750 \text { pounds }\\\end{array}$

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:

Consumption

The action of using up a good or service, typically one that satisfies human desires or needs.

Units

Standardized quantities used to measure, count, or quantify objects or phenomena.

Good X

A placeholder term commonly used in economics to refer to a generic good or product involved in an analysis or example.

Good Y

A hypothetical product used in economics to model consumer choice, market interactions, or other economic scenarios alongside another good, typically referred to as Good X.