Meera Corporation Makes a Product with the Following Standard Costs

question 58

Essay

Meera Corporation makes a product with the following standard costs:
$$\begin{array} { l c c } { \text { Inputs } } & \text { Standard Quantity or Hours } & \text { Stardard Price or Rate } \\\text { Direct materials } & 8 .1 \text { lounces } & \$ 3.00 \text { per hour } \\\text { Direct labor } & 0.5 \text { hours } & \$ 18.00 \text { per hour } \\\text { Variable overhead } & 0.5 \text { hours } & \$ 2.00 \text { per hour }\end{array}$$
In December the company produced 4,200 units using 34,870 ounces of the direct material and 1,900 direct labor-hours. During the month, the company purchased 39,700 ounces of the direct material at a total cost of $111,160. The actual direct labor cost for the month was $35,530 and the actual variable overhead cost was $3,990. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

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Definitions:

Price Wars

A competitive strategy where companies reduce prices of goods or services in succession to undercut competitors, with potential negative effects on industry profits.

Penetration Pricing Strategy

A pricing tactic in which a product is offered at a low price during its initial offering to attract customers and gain market share.

Market Penetration

The strategy of selling more of a product or service to the existing customers or within the current market space to increase its market share.

Ergonomically Designed

Products or environments designed with consideration of the human body and its movements to maximize comfort and efficiency.