A B D E F G H K M N 0 P R Part 2 Cost variance analysis This part relates to Module 23. I have variance analysis support material in the Module 23 folder in course resources. Gourmet, Inc. produces containers of frozen food. During October the company had the following actual production and costs. Actual Containers produced in October 720 Variable Overhead $5,700 Fixed Overhead $13,000 Direct Labor cost $80,000 Which is 3,900 Direct labor hours Actual material purchased $28,000 Which is 15,000 pounds 10 Actual Material pounds used 14,600 pounds 11 12 Overhead is budgeted and applied using direct-labor hours. Standard cost and annual budget information are as follows: 13 14 Standard cost per container 15 Direct Labor 5 hours at $19.75 $99 16 Direct Material 20 pounds at $2.00 $40 Direct labor Variable overhead 5 hours at $1.50 $7.50 Direct labor Fixed Overhead 5 hours at $3.00 $15 Total $161.25 Budgeted Monthly Fixed Overhead $12,500 22 23 Required: Make sure you do not forget to label the variances U or F. You need to show your work either by cell reference or showing your calculation to the side. 4 1. Calculate the direct materials price and quantity variance. Please note that the materials price variance is based on actual material purchased and the quantity variance is based on material used 5 Materials price variance 6 Materials Quantity variance 8 2. Calculate the direct labor rate and efficiency variances. 9 Labor rate variance 0 Labor Efficiency variance 2 3. Calculate the variable overhead spending and efficiency variances. 3 Variable overhead spending variance 4 Variable overhead efficiency variance 35 36 4. Calculate the fixed overhead budget variance. Fixed overhead budget variance 38 9 5. Pick out the two variances that you computed above that you think should be further investigated. Explain why you picked these 2 variances and what might be the possible cause of the variances