(Standard costing) Modern Convenience specializes in making robotic conveyor systems to move materials within a factory. Model #89 accounts for approximately 60 percent of the company’s annual sales. Because the company has produced and expects to continue to produce a significant quantity of this model, Modern Convenience uses the following standard costs to account for Model #89 production
Direct material (28,000 pounds)
Direct labor (1,720 hours at $20 per hour)
Total standard cost
For the 200 units of Model #89 produced in 2010, the actual costs were
Direct material (6,000,000 pounds)
Direct labor (178,400 hours)
Total actual cost
a. Compute a separate variance between actual and standard cost for direct material, direct labor, and manufacturing overhead for the Model #89 units produced in 2010.
b. Is the direct material variance found in (a) driven primarily by the price per pound difference between standard and actual or the quantity difference between standard and actual? Explain.