Analyze the labor price and quantity variances and indicate whether the variances are favorable or unfavorable.
Camping Out Co: compute materials and labor price & quantity variances
Camping Out Co. manufactures down sleeping bags. Each sleeping bag requires 4 pounds of down and takes .3 hours of direct labor. The standard cost of the down used by Camping Out is $8 per pound and the standard labor cost is $10 per hour. In November, Camping Out purchased 15,000 pounds of down for $120,750. During the year, the company manufactured 4,000 sleeping bags. Payroll reported a total of 1,480 direct labor hours at a cost of $14,060.
Instructions
a. Determine the materials price and quantity variances and indicate whether the variances are favorable or unfavorable.