High Tech Builds Fence Panels to Custom Order

question 85

Essay

High Tech builds fence panels to custom order. Materials include 15 units of lumber at $2.25 per unit. Standards call for 3 hours of labor at $25 per hour.
During October, 3,121 fence panels were built. Materials purchased totaled $113,650 for 51,100 units of lumber. Actual lumber usage in production was 51,069 units. The October payroll was $248,000 for 9,500 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:

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probability of outcomes is known.

Marginal Disutility

The added dissatisfaction or inconvenience experienced by consuming one more unit of a good or service.

Marginal Utility

The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed.

Absolute Terms

A method of expression or measurement that is independent of other variables or comparisons, focusing on intrinsic values.