Townsend Incorporated has set the following standards for one unit of product:
Direct material
Quantity: 8.2 pounds per unit
Price: $12.50 per pound
Direct labour
Quantity: 8 hours per unit
Rate: $25 per hour
Actual costs incurred in the production of 3,000 units were as follows
Direct material: $246,000 ($12.00 per pound)
Direct labour: $454,500 ($22.50 per hour)
All materials purchased were consumed during the period.
Required:
Calculate the direct-material price and quantity variances, and the direct-labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable.

Question

Quizplus · Accepted Answer

The Answer of Townsend Incorporated has set the following standards for one unit of product:
Direct material
Quantity: 8.2 pounds per unit
Price: $12.50 per pound
Direct labour
Quantity: 8 hours per unit
Rate: $25 per hour
Actual costs incurred in the production of 3,000 units were as follows
Direct material: $246,000 ($12.00 per pound)
Direct labour: $454,500 ($22.50 per hour)
All materials purchased were consumed during the period.
Required:
Calculate the direct-material price and quantity variances, and the direct-labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable.

Townsend Incorporated Has Set the Following Standards for One Unit