3. Tuscany Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2011:

Direct manufacturing labor 21.000 hours

Total fixed costs 1.200.000 birr

Standard Unit Cost

175 birr

120 birr

50 birr per hour

Standard Price

10 birr per pound

3.5 hours

12 pounds

Expected production and sales 6.000 units

Direct materials 72.000 pounds

Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor is given below;

Standard Quantity

Direct materials

Direct manufacturing labor

During 2011, actual number of units produced and sold was 5,500. Actual cost of direct materials used was 668,800 birr, based on 70,400 pounds purchased at 9.50 birr per pound. Direct manufacturing labor-hours actually used were 18,500, at the rate of 51.50 birr per hour. As a result, actual direct manufacturing labor costs were 952,750 birr. Actual fixed costs were 1,180,000 birr. There was no beginning or ending inventories. Required:

a) Calculate the sales-volume variance and flexible-budget variance for operating income. b) Compute price and efficiency variances for direct materials and direct manufacturing labor.