Buil Corporation manufactures a single product. The standard cost per unit of the product is as follows.

Direct materials2 pounds of plastic at $6 per pound $12

Direct labour2 hours at $13 per hour 26

Variable manufacturing overhead 7

Fixed manufacturing overhead 5

______

Total standard cost per unit $50

The master manufacturing overhead budget for the month based on the normal productive capacity of 20,000 direct labour hours (10,000 units) shows total variable costs of $70,000 ($3.50 per labour hour) and total fixed costs of $50,000 ($2.50 per labour hour). Normal productive capacity is 20,000 direct labour hours. Overhead is applied on the basis of direct labour hours. Actual costs for November in producing 9,700 units were as follows.

Direct materials (20,000 pounds) $119,000

Direct labour (19,600 hours) 256,760

Variable overhead 68,800

Fixed overhead 50,000

Total manufacturing costs $494,560

The purchasing department normally buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

Instructions

a) Compute price and quantity variances for materials and labour respectively. Indicate if each of the variances is favourable or unfavourable.

b) Compute the total overhead variance.