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: Number of units produced 6,000 Materials purchased (18,500 yards)$88,800 Materials used in production (yards) 18,500 Direct labor cost incurred ($6.50/hour)$75,400 Required:(Be sure to indicate whether the variances are favorable or unfavorable and show your work.) 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.
What will be an ideal response?
a. $88,800 - [($13.20/3) × 18,500] = $88,800 - [$4.40 × 18,500] = $7,400 unfavorable.
b. [18,500 - (3 × 6,000)] × $4.40 = $2,200 unfavorable.
c. $75,400 - [$6.00 × ($75,400/$6.50)] = $5,800 unfavorable.
d. [11,600 - (2 × 6,000)] × $6.00 = $2,400 favorable.
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