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Company manufactures only one product x. The company uses a standard cost system and has established the following standards per unit of product x:
Standard Quantity Standard Price Standard Cost
Direct Materials 3.0 lbs. $12 per lb. $36.00
Direct Labor 1.2 hrs. $15 per hr. $18.00
During the month of May, the following activity was recorded:
1. The company produced 6,000 units
2. A total of 21,000 lbs. of material was used at a cost of $241,500.
3. Each of 40 persons employed to produce the product x, worked an average of 160 hours at a rate of $16 per hour.
For direct labor employed in the production of X, compute the direct labor rate variance and the direct labor efficiency variance.
Provides steps necessary to computer the direct labor efficiency variance and the direct labor rate variance.