BUSI 294 Assignment - Variance Analysis Question 1 Chisholm Company produces several products, including a karate robe. The company uses a standard cost system to assist in cost control. According to the standards that have been set for the robes, the factory has a denominator level of activity of 780 direct labour hours which should result in the production of 1,950 robes. The standard costs associated with this level of production are as follows: Total $ per unit of product Direct materials $35,490 $18.20 Direct labour 7,020 3.60 Variable manufacturing overhead* 2,340 1.20 Fixed manufacturing overhead 4,680 2.40 $25.40 * Based on direct labour hours During May, the factory worked only 760 direct labour hours and produced 2,000 robes. The following actual costs were recorded during the month: Total $ per unit of product Direct materials (6,000 metres) $36,000 $18.00 Direct labour 7,600 3.80 Variable manufacturing overhead* 3,800 1.90 Fixed manufacturing overhead 4,600 2.30 $26.00 At standard, each robe should require 2.80 metres of material. All of the materials purchased during the month were used in production. Required: Compute the following variances for April: 1. The materials and quantity variances 2. The labour rate and efficiency variances 3. The variable manufacturing overhead spending and efficiency variances 4. The fixed overhead budget and volume variances