The Rogers Company Uses a Standard Cost Accounting System and Estimates

question 46

Essay

The Rogers Company uses a standard cost accounting system and estimates production for the year to be 60,000 units.At this volume,the company's variable overhead costs are $0.50 per direct labor hour.The company's single product has a standard cost of $30.00 per unit.Included in the $30.00 is $13.20 for direct materials (3 yards)and $12.00 of direct labor (2 hours).Production information for the month of March follows: $$\begin{array} { | l | r | } \hline \text { Number of units produced } & 6,000 \\\hline \text { Materials purchased (18,500 yards) } & \$ 88,800 \\\hline \text { Materials used in production (yards) } & 18,500 \\\hline \text { Direct labor cost incurred ( } \$ 6.50 / \text { hour) } & \$ 75,400 \\\hline\end{array}$$
Required:
(Be sure to indicate whether the variances are favorable or unfavorable. )
a.Compute the direct material price variance.
b.Compute the direct material efficiency variance.
c.Compute the direct labor price (rate)variance.
d.Compute the direct labor efficiency variance.