Orion Corporation has established the following standards for the prime costs of one unit of its chief product, dartboards. Standard Quantity Standard Price or Rate Standard Cost
Direct material 6.00 pounds $1.10 per pound $6.60
Direct labor 0.30 hour $6.00 per hour 1.80
Total $8.40

During June, Orion purchased 227,000 pounds of direct material at a total cost of $274,670. The total wages for June were $72,576, 75 percent of which were for direct labor. Orion manufactured 36,000 dartboards during June, using 205,200 pounds of the direct material purchased in June and 11,520 direct-labor hours.

Required:
Compute the following variances for June.

Direct-material price variance
Direct-material quantity variance
Direct-material purchase price variance
Direct-labor rate variance
Direct-labor efficiency variance

Orion Corporation

Direct material price variance = $22,572 unfavorable

Direct material quantity variance = $71,280 favorable

Direct- labor rate variance = $14,688 favorable

Direct-labor efficiency variance = $1,296 unfavourable

Explanation:

a) Data and Calculations:

                        Standard           Standard Price  Standard

                         Quantity              or Rate               Cost

Direct material 6.00 pounds      $1.10 per pound $6.60

Direct labor      0.30 hour         $6.00 per hour       1.80

Total                                                                        $8.40

Purchase of 227,000 pounds of direct materials = $274,670

Unit price per pound = $1.21

Total wages for June = $72,576

Direct labor costs = $54,432 ($72,576 * 75%)

Direct labor hours = 11,520

Direct labor rate = $4.725 ($54,432/11,520)

Indirect labor costs = $18,144

Number of dart boards manufactured = 36,000

Direct materials used = 205,200

Usage per unit of dart board = 5.7 (205,200/36,000)

Direct material price variance = (Standard price - Actual price) * Actual materials used

= ($1.10 - $1.21) * 205,200

= $22,572 unfavorable

Direct material quantity variance = (Standard quantity - Actual quantity) * Standard rate

= (216,000 - 205,200) * $6.60

= $71,280 favorable

Direct- labor rate variance = (Standard rate - Actual rate) * Actual direct-labor hours

= ($6.00 - $4.725) * 11,520

= $14,688 favorable

Direct-labor efficiency variance = (Standard hours - Actual hours) * Rate

= (10,800 - 11,520) * $1.80

= $1,296 unfavourable

answer; post closing trial balance;