Chen Enterprises purchased 67,000 pounds (cost = $616,400) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires four pounds of direct material at a standard cost of $9 per pound. Direct materials consumed by the end of the period totalled 65,500 pounds in the manufacture of 16,050 finished units.
An examination of Chen's payroll records revealed that the company worked 42,000 labour hours (cost = $621,600) during the period, and specifications called for each completed unit requiring 2.6 hours of labour at a standard cost of $15 per hour:
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

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The Answer of Chen Enterprises purchased 67,000 pounds (cost = $616,400) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires four pounds of direct material at a standard cost of $9 per pound. Direct materials consumed by the end of the period totalled 65,500 pounds in the manufacture of 16,050 finished units.
An examination of Chen's payroll records revealed that the company worked 42,000 labour hours (cost = $621,600) during the period, and specifications called for each completed unit requiring 2.6 hours of labour at a standard cost of $15 per hour:
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.

Chen Enterprises Purchased 67,000 Pounds (Cost = $616,400) of Direct