Concept explainers
The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.
Costs | |||
Actual labor rate | $13 per hour | ||
Actual materials price | $128 per ton | ||
Standard labor rate | $12.50 per hour | ||
Standard materials price | $130 per ton | ||
Quantities | |||
Actual hours incurred and used | 4,150 hours | ||
Actual quantity of materials purchased and used | 1,220 tons | ||
Standard hours used | 4,300 hours | ||
Standard quantity of materials used | 1,200 tons | ||
Instructions
(a) Compute the total, price, and quantity variances for materials and labor.
(b) - Provide two possible explanations for each of the unfavorable variances calculated above, and suggest where responsibility for the unfavorable result might be placed.
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