Easton Industries Developed the Following Standards for One of Its

question 21

Essay

Easton Industries developed the following standards for one of its products:
$\begin{array}{lccccc}\text { Material } & 5 \text { feet } & \$ 15 / \text { foot } & \$ 75 \\\text { Labor } & 10 \text { hours } & \$ 15 / \text { hour } & \$ 150\\\text { Total variable cost }&&&\$225\end{array}$

Actual results for September were:
$$\begin{array} { | l | l | } \hline \text { Units produced } & 12,000 \\\hline \text { Material purchased } & 40,000 \text { feet for } \$ 14.25 / \text { foot } \\\hline \text { Material used } & 70,000 \text { feet } \\\hline \text { Direct Labor } & 119,500 \text { hours at } \$ 15.10 / \text { hour } \\\hline\end{array}$$
Required:
(1) Calculate the following variances:
(a) Material purchase price variance.
(b) Material quantity variance.
(c) Labor rate variance.
(d) Labor efficiency variance.
(2) Why would it be inappropriate to calculate the material price variance at the time the material is used; might there be a situation when it might be all right to do so?