Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:
During the most recent month, the following activity was recorded:
- Twenty thousand ounces of material were purchased at a cost of $2.40 per ounce.
- All of the material was used to produce 2,500 bottles of Whim.
- Nine hundred hours of direct labor time were recorded at a total labor cost of $10,800.
Answer the following:
- Compute the direct materials quantity and price variances for the month.
- Compute the direct labor efficiency and rate variances for the month.
Refer to the information above. Assume that instead of producing 2,500 bottles of Whim during the month, the company produced only 2,000 bottles using 16,000 ounces of material. (The rest of the material purchased remained in raw materials inventory.)
Compute the direct materials quantity and price variances for the month.