Question

Materials and Labor Variances Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established: Direct materials (2.4 lbs. @ $0.95) $2.28 Direct labor (0.75 hr. @ $7.40) 5.55 Standard prime cost $7.83 During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs: Direct materials $68,040 Direct labor $181,357 (for 22,450 hrs.) Required: Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable. Material Variances Price variance $ Usage variance $ Labor Variances Rate variance $ Efficiency variance $

Answer 1