Price and Quantity Variances for Material and Labor
Direct Direct
Materials Labor
Actual price per unit of input (lb and hr) $7.80 $12.00
Standard price per unit of input $7.00 $12.75
Standard inouts allowed per unit of output 10 2
Actual units of input 115,000 30,000
Actual units of output (product) 14,400 14,400
1. Compute the price, quantity, and flexible-budget
variances for direct materials and direct labor. Use U or F to indicate whether
the variances are unfavorable of favorable.
2. Prepare a plausible explanation for the performance.
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