Back Yard Construction builds sheds. Standard cost per shed based on a construction of 50 (12ft X 12ft)sheds:

Direct material 144 square ft, $10 per square ft

Direct labour 2 individuals working 16 hours each , $25 per hour

Variable overhead 32 hours , $9.80 per hour

Fixed overhead 32 hours, $8.25 per hour

During 2023 the following cost were incurred to produce 75 (12 ft X 121ft) sheds:

Direct material 12,000 sq ft purchased and used for $11.50 per sq ft.

Direct labour 2,350 hours, $62,275

Variable overhead $24,500

Fixed overhead $14,500

Required:

Compute the standard cost for 75 sheds in total. Compare this to the actual cost to produce 75 sheds.

Explain to management why differences occurred using the following variances.

a. Direct material price and quantity variance

b. Direct labour rate and efficiency variance

c. Variable overhead variances

d. Fixed overhead variances