Working backward from given variances. The Mancusco Company uses a flexible budget and standard costs to aid planning and control of its manufacturing operations. Its normal costing system for manufacturing has two direct-cost categories (direct materials and direct manufacturing labour—both variable) and two indirect-cost categories (variable manufactur¬

ing overhead and fixed manufacturing overhead, both allocated using direct manufacturing labour-hours).

At the 40,000 budgeted direct manufacturing labour-hour level for August, budgeted direct manufacturing labour is $960,000, budgeted variable manufacturing overhead is

$576,000, and budgeted fixed manufacturing overhead is $768,000. The following actual results are for August:

Direct materials price variance (based on purchases) $211,200 F Direct materials efficiency variance 82,800 U Direct manufacturing labour costs incurred 62 7,3 00 Variable manufacturing overhead flexible budget variance 12,420 U Variable manufacturing overhead efficiency variance 21,600 U Fixed manufacturing overhead incurred 716,952 Fixed manufacturing overhead spending variance 51,048 F The standard cost per kilogram of direct materials is $13.80. The standard allowance is three kilograms of direct materials for each unit of product. Thirty thousand units of product were produced during August. There was no beginning inventory of direct materials. There was no beginning or ending work in process. In August, the direct materials price variance was

$1.32 per kilogram.

In July, labour troubles caused a major slowdown in the pace of production, resulting in an unfavourable direct manufacturing labour efficiency variance of $54,000. There was no manufacturing labour price variance. These troubles persisted into August. Some workers quit. Their replacements had to be hired at higher rates, which had to be extended to all workers. The actual average wage rate in August exceeded the standard average wage rate 318 CHAPTER 8 by $0.60.

Required 1. Compute the following for August:

a. Total kilograms of direct materials purchased

b. Total number of kilograms of excess direct materials used

c. Variable manufacturing overhead spending variance

d. Total number of actual hours of direct manufacturing labour-hours used

e. Total number of standard direct manufacturing labour-hours allowed for the units produced

f. Production-volume variance 2. Compare and contrast the different methods available to Mancuso to control (i) variable manufacturing overhead and (ii) fixed manufacturing overhead.