Calculating and Interpreting Direct Material Variances
Easy Roller, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:
| Standard Quantity | Standard Price (Rate) | Standard Unit Cost |
Direct costs |
|
|
|
Plastic | 12 sq ft. | $ 0.75 per sq. ft. | $9.00 |
Direct labor | .25 hr. | 12.00 per hr. | 3.00 |
Variable manufacturing overhead |
| 1.20 per direct labor hour | 0.30 |
Fixed manufacturing overhead ($360,000/900,000 units) |
|
| 0.40 |
Easy Roller had the following actual results for the past year.
Number of units produced and sold | 1,000,000 |
Number of square feet of plastic used | 11,800,000 |
Cost of plastic purchased and used | $ 8,260,000 |
Number of labor hours worked | 245,000 |
Direct labor cost | $ 2,891,000 |
Variable overhead cost | $ 318,500 |
Fixed overhead cost | $ 355,000 |
Required:
Calculate Easy Roller’s direct materials price and quantity variances.
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