Martin Manufacturing manufactures ready-mix cement with the following standard costs:
Direct materials 2.5 pounds at $2.40 per pound
Direct labor 1.5 hours at $18.00 per hour
Actual results for the month of September were as follows:
Units produced 6,500
Materials purchased (18,000 pounds) $36,000
Materials used 17,500 pounds
Labor used (9,500 hours) $180,500
A. Calculate the following variances for the month of September:
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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