Problem 1
Backpack Inc. reported the following actual and budgeted results for 2021.
Actual Budgeted
Backpack production 200,000 180,000
Backpacks sold 150,000 160,000
Selling price $20 $18
Direct materials per backpack 1.5 yards @ $2.00
Direct labor per backpack 0.5 hr. @ $14
Direct materials used in yards 290,000
Direct material costs $507,500
Direct manufacturing hours used 140,000
Direct labor costs $1,820,000
Required:
- Calculate the direct materials price and efficiency variances.
- Calculate the direct labor price and efficiency variances.