(Variances and conversion cost category) Kansas Brass makes small brass statues. Until recently, the company used a standard cost system and applied overhead to production based on direct labor hours. The company automated its facilities in March 1996 and revamped its accounting system so that there are only two cost categories: direct material and conversion costs. Estimated variable conver¬ sion costs for April 1996 were $85,000, and estimated fixed conversion costs were $38,000; machine hours were estimated at 10,000 for April. Expected out¬ put for April was 5,000 statues. In April, the firm actually used 9,000 machine hours in making 4,800 statues. The firm incurred conversion costs totaling $115,000; $75,000 of this amount was variable cost.

a. Using the four-variance approach, compute the variances for conversion costs in April.

b. Evaluate the effectiveness of the firm in controlling costs in April.LO1