In all problems involving variances, use “F” and “U” to indicate favorable and unfavorab...

In all problems involving variances, use “F” and “U” to indicate favorable and unfavorable variances, respectively.

Materials and labor variances

Inge Inspections Inc. specializes in determining whether a building or house’s drainpipes are properly tied into the city’s sewer system. The company pours colored chemical through the pipes and collects an inspection sample from each outlet, which is then analyzed. Each job should take 15 hours for each of four inspectors, who are paid $18 per hour. Each job uses 5 gallons of Brite (a colored chemical), which should cost $25 per gallon. Data from the company’s most recent job (a building) follow:

Required:

Compute the following variances, using the formulas on pages 402 and 403:

1. Materials price and quantity variances.

2. Labor rate and efficiency variances.