Assume that during the past month, The Sultan produced 10,000 cartons of Sharpline highlighters. Sharpline has a translucent barrel and cap with a visible ink supply for see-through colour. The special fluorescent ink is fade- and water-resistant. Each carton contains 100 boxes of markers, and each box contains five markers. The markers come in boxes of one of five fluorescent coloursorange, blue, yellow, green, and pinkand in a five-colour set. The standard cost for one carton of 500 markers is as follows:

Standard

Manufacturing Cost ElementsQuantityPriceCost

Direct materials

• Tips (boxes of 500)500$0.04=$ 20.00
• Translucent barrels and caps (boxes of 500) 500$0.08=40.00
• Fluorescent ink (5-litre container)5 litres$6.40 per litre=32.00

Total direct materials$ 92.00

Direct labour0.25 hours$10.20=2.55

Overhead0.25 hours$48.00=12.00

$ 106.55

During the month, the following transactions occurred in manufacturing the 10,000 cartons of highlighters:

1.Purchased 10,000 boxes of tips for $143,000 ($14.30 per 500 tips); purchased 10,200 boxes of translucent barrels and caps for $459,000 ($45 per 500 barrels and caps); and purchased 9,900 containers of fluorescent ink for $329,175 ($33.15 per five-litre container).

2.All materials purchased during the period were used to make markers during the period.

3.A total of 2,300 direct labour hours were worked at a total labour cost of $22,540 (an average hourly rate of $9.80).

4.The variable manufacturing overhead incurred was $38,600, and the fixed overhead incurred was $86,000.

The manufacturing overhead rate of $48.00 is based on a normal capacity of 2,600 direct labour hours.

Instructions:

(a).Compute the Sultan's total variance.

(b). Compute the Sultan's variance for each direct materials, direct labour, and manufacturing overhead.