Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:

Direct materials: 5 pounds at $10 per pound $ 50
Direct labor: 4 hours at $16 per hour 64
Variable overhead: 4 hours at $7 per hour 28
Total standard cost per unit $ 142

The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 24,600 units and incurred the following costs:

a.
Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.

b.
Direct laborers worked 57,000 hours at a rate of $17 per hour.

The planning budget for March was based on producing and selling 20,000 units. However, during March the company produced and sold 24,600 units and incurred the following costs:

a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (10 - 7.5)*164,000= 410,000 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (123,000 - 164,000)*10= 410,000 unfavorable

b. Direct laborers worked 57,000 hours at a rate of $17 per hour.

Direct labor efficiency variance= (SQ - AQ)*standard rate

Direct labor efficiency variance=(98,400 - 57000)*7= 289,900 favorable

Direct labor price variance= (SR - AR)*AQ

Direct labor price variance= (7 - 17)*57,000= 570,000 unfavorable