Karenville Corporation manufactures and sells a single product, using a standard cost system. The standard cost per unit of product is:

The factory overhead cost per unit was calculated from the following annual overhead cost budget for a 60,000-unit volume:

The charges to the Manufacturing Department for November, when 5,000 units were produced, were as follows:

The Purchasing Department normally buys about the same quantity of plastic as is used in production during a month. In November, 5,200 pounds were purchased at a price of $2.10 per pound.
The company has divided its responsibilities so that the Purchasing Department is responsible for the price at which materials and supplies are purchased, while the Manufacturing Department is responsible for the quantities of materials used.
The Manufacturing Department manager performs the timekeeping function and, at various times, an analysis of factory overhead and direct labor variances has shown that the manager has deliberately misclassified labor hours (for example, direct labor hours might be classified as indirect labor hours and vice versa), so that only one of the two labor variances is unfavorable. It is not economically feasible to hire a separate timekeeper.
Required:
(1) Calculate these variances from standard costs for the data given:
(a) Materials purchase price variance;
(b) Materials quantity variance;
(c) Direct labor rate variance;
(d) Direct labor efficiency variance;
(e) Factory overhead controllable variance, analyzed for each expense classification.
(2) Explain whether the division of responsibilities should solve the conflict between price and quantity variances.
(3) Prepare a report that details the factory overhead budget variance. The report, which will be given to the Manufacturing Department manager, should display only that part of the variance that is the manager's responsibility and should highlight information useful to that manager in evaluating departmental performance and in considering corrective action.

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Materials: 1 pound of plastic at 2 Direct labor: 1.6 hours at $4 Variable factory overhead cost per unit Fixed factory overhead cost per unit $2.00 6.40 3.00 1.45 $12.85 Variable factory overhead cost: Indirect labor (30,000 hours at $4).. Supplies (oil 60,000 galions at $.50) Allocated variable service department cost... Total variable factory overhead cost $120,000 30,000 30,000 $180,000 Fixed factory overhead cost: Supervision 27,000 …… …… Depreciation. Other fixed costs 45,000 15,000 87,000 Total fixed factory overhead cost Total budgeted annual factory overhead cost for 60,000 units $267,000 Materials (5,300 pounds at $2) Direct labor (8,200 hours at $4.10) Indirect labor (2,400 hours at $4.10).. Supplies (oil 6,000 gallons at $.55) Allocated variable service department cost Supervision Depreciationan.r.s. Other fixed costs. $10,600 33,620 9,840 3,300 3,200 2,475 3,750 Total $68.035