Tao Industries,Inc

question 37

Essay

Tao Industries,Inc.developed standard costs for direct material and direct labor.In 2012 Tao estimated the following standard costs for one of their major products,the 50-gallon plastic container.

During August,Tao produced and sold 8,000 containers using 1,900 pounds of direct materials at an average cost per pound of $41 and 250 direct labor hours at an average wage of $18.25 per hour.Determine the following variances for August:
Required:
a.Total direct material cost variance.
b.Direct material price variance.
c.Direct material quantity variance.
d.Total direct labor cost variance.
e.Direct labor rate variance.
f.Direct labor efficiency variance.

---

Definitions:

Variable Costs

Variable Costs are costs that vary directly with the level of production or sales volume.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, which are constant regardless of business activity levels.

Trade Discount

A discount granted by the supplier to a purchaser of goods for resale.

Trade Discount

A reduction in the retail price provided by a seller to a buyer, often based on the quantity of goods purchased or to encourage prompt payment.