INDIANA CORP. INDIANA Corp. produces a product, cleverly named "Product X" for which the following standard costs have been established for the production of ONE unit: Direct materials Direct labor At

the start of the year, the company did some planning and, based on market conditions and other information available, they forecasted sales of 600 units for the upcoming year. The company also has a Just-in-Time (3) inventory system under which materials are only ordered and units are only produced in response to customer orders. No inventories are kept and, therefore, the number of units produced always equals the number of units sold. 7 As the year unfolded, demand for the Product X was not as strong as originally anticipated and actual production and sales amounted to 500 units. The following actual costs were incurred in connection with the production of the 500 units during the year: Direct matenals Direct labor 6 lbs@ 3.5 hours@ $1.25 per lb. $12 per hour 1. DIRECT MATERIALS REQUIRED: For both direct materials AND direct labor, provide a meaningful analysis showing the following: 2,900 lbs @ average cost of 1,500 hours@average wage rate of 2. DIRECT LABOR: a. The amount used as shown on the master planning budget b. The flexible budget amount c. The actual cost incured d. The static budget variance (or total budget variance) e. The flexible budget variance (or standard costvariance) f. The price variance g. The usage (or quantity) variance h. 2 possible explanations for the price and usage variance. $1.30 per pound $11.50 per hour a. The amount used as shown on the master planning budget b. The flexible budget amount c. The actual cost incured d. The static budget variance (or total budget variance) e. The flexible budget variance (or standard costvariance) f. The rate variance g. The efficiency vai arce h. 2 possible explanations for the price and usage variance