1) JetCo has established the following standards for the prime costs of one unit of its chief product, chessboards.
Standard Price or Rate
$2 per pound
$10 per hour
During June, JetCo purchased 125,000 pounds of direct material at a total cost of $275,000. The total direct labor wages were $50,000. JetCo produced 20,000 chessboards during June, using 90,000 pounds of direct material and 6,000 direct-labor hours.
Compute the following variances for June, and indicate whether each is favorable or unfavorable.
a) (7 points) Direct Material Price Variance
b) (7 points) Direct Material Quantity Variance
c) (7 points) Direct Labor Rate Variance
d) (7 points) Direct Labor Efficiency Variance