Ceelo Company purchased (at a cost of $10,00) and used 2,400 pounds of materials during May. Ceelo’s standard cost of materials per unit produced is based on 2 pounds per unit at a cost of $5 per pound. Production in May was 1,050 units.
a. Compute the total, price, and quantity variances for materials.
b. Assume Ceelo also had an unfavorable labor quantity variance. What is a possible scenario that would provide one cause for the variances computed in (a) and the unfavorable labor quantity variance?