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Using the information provided by computing the following variances. Show all calculations and label your...

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Accounting

Using the information provided by computing the following variances. Show all calculations and label your answers clearly.

The actual price paid for ingredients

$50.00

The standard price for ingredients

$49.75

Actual quantity purchased and used

3.85 lbs.

Standard quantity used

4 lbs.

Actual labor rate per hour

$52.50

Standard labor rate per hour

$50.00

Actual hours for cakes produced

7 hours

Standard hours for cakes produced

6.9 hours

  1. Compute the direct material price variance, direct material quantity variance, and total direct materials variance.

  1. Compute the direct labor rate variance, direct labor time variance, and total direct labor variance.

  1. After analyzing these variances, should Tom be concerned? Why or why not?

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