Comprehensive Review of Variances with Missing Data: Merriweather Company makes oil for whale oil lamps. One product, Interno, is manufactured as a blend of three chemicals: Alpha-28, Beta-32, and Gamma-07 (A, B, and G, for short). This solvent is very active and must be shipped in special containers, one container per unit of output. In addition to the materials, the blending process requires three direct labor-hours per liter of solvent. Factory overhead is applied at the rate of 150 percent of direct labor costs. You have been working for Merriweather Company as a new management trainee in the controller's office. Today you had an opportunity to talk to the controller and advise him on the merits of your background and your education. The controller handed you some information on last month's production of industrial solvents and asked you to analyze the variances for the product Interno. Confident in your abilities, you carried the computer printout with you as you left the office. Unfortunately, on the way home a gust of wind blew some of your papers away. You were able to retrieve some of the information, but a good deal of it was torn or shredded. At home, you have pieced together the following fragments from the computer printouts:

You recall the $927 favorable efficiency variance applies to chemicals but not to containers. You also recall a discussion concerning the new direct labor rate of $9 per hour and how that rate had caused the production planning department to recom- mend a re-evaluation of the product line since certain products may not be profitable at this rate.

Required: Defend your reputation with the controller and compute as many variances as possible. (Hint: Separating the chemical inputs from the containers will make the solution more manageable.) If any variances cannot be computed, state why.

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d costs per un 500 1 Alpha 28 @ 5.00/11 2001 Beta 32 @ 10.00 400 1 Gamma 07 @ tal $ 8.30 lit Expect 12,000 direct la $80,000 fixed over $71,500 variable ove $4,000 container costs ual costs Varia 2,200 1 Alpha 800 1 Beta. 1,000 1 Gamma 28 @ 32 @ 5.0 $11.20/1 $927 Fav. Eff 07 @ 4,010 containers $ 9.10/1 @ $ .95 Total materials $32,979.50 direct labor 97,200. variable ovh 61,700. fixed overhead 80,960.