Rompola Corporation manufactures futons with the following standard costs per unit:
Direct materials 80 yards at $2.00 per yard
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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