is a privately held furniture manufacturer. For August 2018, Dunn had the following standards for one of its products, a wicker chair:Standards per ChairDirect materials 2 square yards of input at $5 per square yardDirect manufacturing labor 0.5 hour of input at $10 per hourThe following data were compiled regarding actual performance: actual output units (chairs) produced, 2,000;square yards of input purchased and used, 3,700;price per square yard, $5.10;direct manufacturing labor costs, $8,820;actual hours of input, 900;labor price per hour, $9.80.
1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor.
2. Suppose 6,000 square yards of materials were purchased (at $5.10 per square yard), even though only 3,700 square yards were used. Suppose further that variances are identified at their most timely control point; accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department.
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