Clarissa McWhirter, vice-president of Cyprus Company, was pleased to see a small variance on the income statement after the trouble the company had been having in controlling manufacturing costs. She noted that the $18,500 overall manufacturing variance reported last period was well below the 3% limit that had been set for variances. The company produces and sells a single product. The standard cost card for the product follows:

The following additional information is available for the year just completed:
a. The company manufactured 20,000 units of product during the year.
b. A total of 78,000 metres of material was purchased during the year at a cost of $3.25 per metre. All of this material was used to manufacture the 20,000 units. There were no beginning or ending inventories for the year.
c. The company worked 32,500 direct labour-hours during the year at a cost of $15 per hour.
d. Overhead cost is applied to products on the basis of standard direct labour-hours. Data relating to manufacturing overhead costs follow:

Required:
1. Compute the direct materials price and quantity variances for the year.
2. Compute the direct labour rate and efficiency variances for the year

3. For manufacturing overhead, compute the following:
a. The variable overhead spending and efficiency variances for the year.
b. The fixed overhead budget and volume variances for the year.

4. Total the variances you have computed, and compare the net amount with the $18,500 mentioned by the vice-president. Do you think that everyone should be congratulated for a job well done? Explain.

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Standard Cost Card-Per Unit Direct materials, 4 metres at $3.00 per metre.... Direct labour, 1.5 direct labour-hour at $16 per direct labour-hour. Variable overhead, 1.5 direct labour-hour at $4 per direct labour-hour.. Fixed overhead, 1.5 direct labour-hour at $6 per direct labour-hour Standard cost per unit....... $12 24 6 9 $51