Rompola Corporation manufactures futons with the following standard costs per unit:

Direct materials                                80 yards at $2.00 per yard

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Direct labor 20 hours at $              20 per hour

The actual results for the year were as follows:

Direct materials                120,000 yards purchased at a total cost of $264,000; 118,000 yards used

Direct labor                         32,000 hours worked at a total cost of $604,800

Production                          1,500 units


A. Compute the following variances:

1. Direct materials price variance

2. Direct materials usage variance

3. Direct materials inventory variance

4. Direct labor price variance

5. Direct labor usage variance

B. Interpret each of the variances calculated.

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