(Variances and variance responsibility) Linda Walters Co. produces miniature footballs with the following standard costs per unit:

Following are the charges to the manufacturing department for November when 5,000 units were produced:

Purchasing normally buys about the same quantity as is used in production during a month. In November, it purchased 5,200 square feet of material at a price of $2.10 per foot.

a. Calculate the following variances from standard costs for the data given:
1. Material purchase price 2. Material quantity 3. Direct labor rate 4. Direct labor efficiency 5. Overhead budget

b. The company has divided its responsibilities so that the Purchasing De¬ partment is responsible for the purchase price of materials and the Man¬ ufacturing Department is responsible for the quantity of materials used. Does this division of responsibilities solve the conflict between price and quantity variances? Explain your answer.

c. Prepare a report detailing the overhead budget variance. The report, which will be given to the Manufacturing Department manager, should show only that part of the variance that is her responsibility and should highlight the information in ways that would be useful to her in evaluat¬ ing departmental performance and when considering corrective action.

d. Assume that the departmental manager performs the timekeeping func¬ tion for this manufacturing department. From time to time, analyses of overhead and direct labor variances have shown that the manager has deliberately misclassifiecl labor hours (that is, listed direct labor hours as indirect labor hours and vice versa) so that only one of the two labor variances is unfavorable. It is not feasible economically to hire a sepa¬ rate timekeeper. What should the company do, if anything, to resolve this problem?
(CMA adapted)LO.1

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Material: one square foot of leather at $2.00 Direct labor: 1.6 hours at $4.00 Variable overhead cost Fixed overhead cost Total cost per unit $ 2.00 6.40 3.00 1.45 $12.85 Per-unit overhead cost was calculated from the following annual overhead budget for 60,000 footballs. Variable Overhead Cost Indirect labor-30,000 hours at $4.00 Supplies (oil)-60,000 gallons at $0.50 $120,000 30,000 Allocated variable service department costs Total variable overhead cost 30,000 $180,000 Fixed Overhead Cost Supervision Depreciation Other fixed costs Total fixed overhead cost Total budgeted overhead cost at 60,000 units $ 27,000 45,000 15,000 87,000 $267,000