Carter Company has one product and the following costs per unit to make one unit of product:

Direct materials per unit of product: 5 pounds @ $1.25 per pound

Direct labor per unit of product: 6 minutes to make one product @ $13/hour

Variable overhead (based on Direct Labor Hours): 6 minutes at $5/DLH (Hint: remember to convert minutes to hours)

The planning budget was based on producing and selling 4,000 units. However, during the period, the company incurred the following costs:

(a) 27000 pounds were used to produce 5000 units of product. Cost per bag was $1.10

(b) Direct laborers worked 490 hours at a rate of $14.00 per hour

(c) Total variable manufacturing overhead for the month was $2700 (d) Fixed Expense information is not given in this example (e) Sales price per unit is $25

Homework Problem #2: Showing the formulas, calculate the following variances: a) Materials Quantity Variance b) Materials Price Variance c) Labor Rate Variance d) Labor Efficiency Variance e) Variable overhead Rate Variance f) Variable Overhead Efficiency Variance.