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Assingment 6 ( 1/58(

Chen Enterprises purchased 67,000 pounds (cost = $616,400) of direct material to be used in the
manufacture of the company's only product. According the production specifications, each

completed unit requires four pounds of direct material at a standard cost of $9 per pound. Direct
materials consumed by the end of the period totaled 65,500 pounds in the manufacture of 16,050
finished units.
An examination of Chen's payroll records revealed that the company worked 42,000 labor hours

(cost = $621,600) during the period, and specifications called for each completed unit requiring 2.6

hours of labor at a standard cost of $15 per hour.

Assume that the company computes variances at the earliest point in time.

Required:
Calculate the direct-material price and quantity variances, and the direct-labor rate and efficiency

variances. Indicate whether each variance is favorable or unfavorable.

Answer: