(3a) Efficiency variance: $7,500 U (3b) Volume variance: $42,000 F \"Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year. but our production people did a good job in controlling costs as well.\" said Kim Clark. president of Martell Company. \"Our $18000 overall manufacturing cost variance is only |.5': of the $1.200.000 standard cost of products sold during the year. That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year." The company produces and sells a single product. A standard cost card for the product follows: Standard Cost CardPer Unit of Product Direct materials. 2 metres at $3.45 per metre $16.90 Direct labour, 1.4 hours at $3 per hour 11.20 Variable overhead. 1.4 hours at $2.50 per hour 3.50 Fixed overhead, 1.4 hours at $6 per hour m 40.00 Standard cost per unit _ The following additional information is available for the year just completed: Page 5T9 a. The company manufactured 30.000 units of product during the year. b. A total of 64.000 metres of material was purchased during the year at a cost of $8.55 per metre. All of this material was used to manufacture the 30.000 units. There were no beginning or ending inventories for the year. c. The company worked 45.000 direct labour-hours during the year at an average cost of $7.30 per hour. d. Overhead is applied to products on the basis of direct labour-hours. Data relating to manufacturing overhead costs follow: Denominator a ctivity level [d lrect labour-ho u r5] 35.000 Budgeted xed overhead costs {from the overhead exible budget} $210000 Actual variable overhead costs Incurred 108,000 Actual xed overhead costs incurred 21 1,800 Required: |. Compute the direct materials price and quantity variances for the year. 2. Compute the direct labour rate and efciency variances for the year. 3. For manufacturing overhead. compute the following: a. The variable overhead spending and efciency variances for the year. b. The xed overhead budget and volume variances for the year. 4. Total the variances you have computed. and compare the net amount with the 518.000 mentioned by the president. Do you agree that bonuses should be given to everyone for good cost control during the year? Explain your