United Carborundum Company Manufactures 100-Pound Bags of Chemicals That Have

Essay

United Carborundum Company manufactures 100-pound bags of chemicals that have the following unit standard costs for direct materials and direct labor:
Direct materials (100 lbs. @ $1.00 per lb.) $100.00
Direct labor (0.5 hours at $24 per hour) 12.00
Total standard direct cost per 100 lb. bag $112.00
The following activities were recorded for October:
• 1,000 bags were manufactured.
• 95,000 lbs. of materials costing $76,000 were purchased.
• 102,500 lbs. of materials were used.
• $12,000 was paid for 475 hours of direct labor.
There were no beginning or ending work-in-process inventories.
Required:
a. Compute the direct materials variances.
b. Compute the direct labor variances.
c. Give possible reasons for the occurrence of each of the preceding variances.