1. Macro Company has developed the following standards for one of its products. (5 m)

Cost card for One Unit of Product Materials: 30 square feet $5 per square foot $150.00 Direct labor: 16 hours $7 per hour 112.00 Variable manufacturing overhead: 16 hours $5 per hour 80.00 Total standard variable cost per unit $ 342.00 The company records materials price variances at the time of purchase. The following activity occurred during the month of April: Materials purchased: 80,000 sq. feet at $5.30 per sq. foot Materials used: 74,000 square feet Units produced: 2,500 units Direct labor: 42,000 hours at $6.70 per hour Actual variable manufacturing overhead: $228,000 Required: (for total quantity produced) (10 m) a. Calculate the direct materials price variance. b. Calculate the direct materials usage variance. c. Calculate the direct labor rate variance. d. Calculate the direct labor efficiency variance. e. Calculate the variable overhead spending variance. f. Calculate the variable overhead efficiency variance.

2. Spencer Company manufactures a single product that has a standard materials cost of $20 (4 units of materials at $5 per unit), standard direct labor cost of $9 (1 hour per unit), and standard variable overhead cost of $4 (based on direct labor hours). Fixed overhead is budgeted at $17,000 per month. The following data pertain to operations for May 2004:

Materials purchased:8,000 units costing $39,400 Materials used in production of 1,500 units of finished product: 6,200 units of materials Direct labor used:1,500 hours costing $15,000 Variable overhead costs incurred: $ 5,960 Fixed overhead costs incurred: $17,500 Required: (10 marks) Compute the following variances (show calculations): a. Materials usage variance b. Labor rate variance c. Labor efficiency variance d. Variable overhead spending variance e. Variable overhead efficiency variance f. Fixed overhead budget variance Give one possible explanation for each of the six variances computed.

Conceptual Assignment (20 marks) 1. Macro Company has developed the following standards for one of its products. (5 m) Cost card for One Unit of Product Materials: 30 square feet $5 per square foot $150.00 Direct labor: 16 hours $7 per hour 112.00 80.00 Variable manufacturing overhead: 16 hours $5 per hour Total standard variable cost per unit $ 342.00 The company records materials price variances at the time of purchase. following activity occurred during the month of April: Materials purchased: 80,000 sq. feet at $5.30 per sq. foot Materials used: 74,000 square feet Units produced: 2,500 units Direct labor: 42,000 hours at $6.70 per hour Actual variable manufacturing overhead: $228,000 The Required: (for total quantity produced) (10 m) a. Calculate the direct materials price variance. b. Calculate the direct materials usage variance. c. Calculate the direct labor rate variance. d. Calculate the direct labor efficiency variance. e. Calculate the variable overhead spending variance. f. Calculate the variable overhead efficiency variance. 2. Spencer Company manufactures a single product that has a standard materials cost of $20 (4 units of materials at $5 per unit), standard direct labor cost of $9 (1 hour per unit), and standard variable overhead cost of $4 (based on direct labor hours). Fixed overhead is budgeted at $17,000 per month. The following data pertain to operations for May 2004: Materials purchased:8,000 units costing $39,400 Materials used in production of 1,500 units of finished product: 6,200 units of materials Direct labor used:1,500 hours costing $15,000 Variable overhead costs incurred: $ 5,960 Fixed overhead costs incurred: $17,500 Required: (10 marks) Compute the following variances (show calculations): a. Materials usage variance b. Labor rate variance c. Labor efficiency variance d. Variable overhead spending variance e. Variable overhead efficiency variance f. Fixed overhead budget variance Give one possible explanation for each of the six variances computed. -1