1.

Hurren Corporation makes a product with the following standard costs:

	Standard Quantity or Hours	Standard Price or Rate	Standard Cost Per Unit
Direct materials	3.7 grams	$5.00 per gram	$18.50
Direct labor	1.2 hours	$12.00 per hour	$14.40
Variable overhead	1.2 hours	$5.00 per hour	$6.00

The company reported the following results concerning this product in June.

Originally budgeted output	8,000	units
Actual output	7,900	units
Raw materials used in production	28,310	grams
Actual direct labor-hours	3,800	hours
Purchases of raw materials	31,100	grams
Actual price of raw materials purchased	$5.10	per gram
Actual direct labor rate	$12.90	per hour
Actual variable overhead rate	$4.70	per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for June is:

$3,110 U

$2,846 F

$2,846 U

$3,110 F

2.

Hurren Corporation makes a product with the following standard costs:

	Standard Quantity or Hours	Standard Price or Rate	Standard Cost Per Unit
Direct materials	5.2 grams	$6.00 per gram	$31.20
Direct labor	0.7 hours	$17.00 per hour	$11.90
Variable overhead	0.7 hours	$6.00 per hour	$4.20

The company reported the following results concerning this product in June.

Originally budgeted output	5,800	units
Actual output	5,700	units
Raw materials used in production	28,460	grams
Actual direct labor-hours	3,800	hours
Purchases of raw materials	32,600	grams
Actual price of raw materials purchased	$6.10	per gram
Actual direct labor rate	$17.90	per hour
Actual variable overhead rate	$5.70	per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The variable overhead efficiency variance for June is:

$1,083 F

$1,140 U

$1,083 U

$1,140 F

3.

The management of Heider Corporation is considering dropping product H58S. Data from the company's accounting system appear below:

Sales	$950,000
Variable expenses	$380,000
Fixed manufacturing expenses	$362,000
Fixed selling and administrative expenses	$242,000

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $217,000 of the fixed manufacturing expenses and $178,000 of the fixed selling and administrative expenses are avoidable if product H58S is discontinued. What would be the effect on the company's overall net operating income if product H58S were dropped?

Overall net operating income would decrease by $34,000.

Overall net operating income would increase by $175,000.

Overall net operating income would increase by $34,000.

Overall net operating income would decrease by $175,000.