labor and material variances
You are the Production Manager for the Matador Company. You have just received the following Variance Report for December 2009
variance report for dec 2009
budget actual variance
labor $3,000 3,200 ($200)
material $12,300 $11,000 $1,300
: Variance Report
From the accounting Department you also found the following information:
• Actual labor quantity = 950 hours; Standard Labor Rate = $3.50 per hour
• Actual material quantity = 1330 units; Standard Material Rate = $8.50/unit
1. Calculate the Labor and Material Variances in Table 1 in their price-related and quantity-related variances using the following diagrams and identify which variances are Favorable and which are Unfavorable.
2. Using your results from Question #1 as evidence, explain what you think was happening in your Production Department in December. Be specific.
