Robb Industries, Inc. (RII), developed standard costs for direct material and direct labor.

In 2004, RII estimated the following standard costs for one of their major products, the 10-gallon plastic container.

Budgeted quantity           Budgeted price

Direct materials 0.10 pounds        $30 per pound

Direct labor        0.05 hours           $15 per hour

During June, RII produced and sold 5,000 containers using 490 pounds of direct materials at an average cost per pound of $32 and

250 direct manufacturing labor-hours at an average wage of $15.25 per hour.

a.            What is June’s direct material price variance?

(sp-ap)*aq

standard price 30             acutal quantity 490

actual price 32   direct material 980 unfavorable

b.            What is June’s direct material efficiency variance?

sp*(sq-aq)

standard price 30             actual quantity 490

standard quality 500       direct material 300 favorable

c.            What is June’s direct labor rate variance?

(sr-ar)*ah

standard rate 15              actual hours 450

actual rate 15.25              manufactoring labor variance 62.50 unfavorable

d.            What is June’s direct labor efficiency variance?

(sh-ah)*sr

standard hours 250         standard rate 15

actual hours 250              maunfaturing varience 0