Lionaire, Inc During the Last Period, the Company Operated at 80% of on 60,000

question 117

Essay

Lionaire, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity.
$$\begin{array} { | l | l | } \hline & \text { Per Unit } \\\hline \text { Direct materials (61bs. @\$2.00/1b.) } & \$ 12.00 \\\hline \text { Direct labor (1hrs.@\$8.00/hr.) } & 8.00 \\\hline\end{array}$$ During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were:
$$\begin{array} { | l | l | } \hline \text { Direct materials } ( 760,000 \mathrm { lbs } . ) & \$ 1,558,000 \\\hline \text { Direct labor } ( 126,000 \mathrm { hrs } . ) & 1,014,300 \\\hline\end{array}$$ Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
$$\begin{array} { | l | l | } \hline \text { Direct materials: } &\quad\quad\quad\quad \\\hline \text { Price variance } & \\\hline \text { Quantity variance } & \\\hline & \\\hline \text { Direct labor: } & \\\hline \text { Rate variance } & \\\hline \text { Efficiency variance } & \\\hline\end{array}$$