Question : 6.Rhodes Corporation manufactures a product with the following standard costs: Direct : 1416270

 

6.Rhodes Corporation manufactures a product with the following standard costs:

 

Direct materials (20 yards @ $1.85 per yard)$ 37.00

Direct labor (4 hours @ $12.00 per hour)48.00

Variable factory overhead (4 hours @ $5.40 per hour)21.60

Fixed factory overhead (4 hours @ $3.60 per hour)14.40

Total standard cost per unit of output$121.00

 

Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output).

 

The following information pertains to the month of July:

 

Direct materials purchased (16,000 yards @ $1.80 per yard)$28,800

Direct materials used (9,400 yards)

Direct labor (1,880 hours @ $12.20 per hour)22,936

Actual factory overhead16,850

Actual production in July:  460 units

 

 

a.Compute the following variances for the month of July, indicating whether each variance is favorable or unfavorable:

 

(1)Materials purchase price variance

(2)Materials quantity variance

(3)Labor rate variance

(4)Labor efficiency variance

 

b.    Give potential reasons for each of the variances.  Be sure to consider inter-relationships among variances.