Cataloochee Company produces dining room furniture. It expects to produce and sell 40,000 dining sets over the coming year. Each dining set is referred to as a unit. The company uses machine hours to allocate both variable and fixed manufacturing overhead costs. The budgeted quantity of machine hours (MHRS) is 120,000 MHRS. The budgeted fixed manufacturing overhead (FMOH) costs are $6,000,000 and the budgeted variable manufacturing overhead (VMOH) costs are $3,600,000. The actual number of units made and sold was 45,000. The actual fixed manufacturing overhead costs incurred were $6,300,000 and the actual variable manufacturing overhead costs incurred were $4,039,875. Actual machine hours used were 141,750 hours.

Budgeted price/quantity

Direct materials quantity 4.00 board feet per unit

Direct materials price $4.00 per board foot

Direct labor hours 2.00 hours per unit

Direct labor rate $20.00 per direct labor hour

Actual results

Direct material quantity 189,000.00 board feet

Direct materials price $4.40 per board foot

Direct labor hours 85,500.00 hours

Direct labor rate $19.00 per hour

You are required to:

1. compute the direct materials price and quantity variances;
2. compute the direct labor price and efficiency variances;
3. compute the variable manufacturing overhead spending and efficiency variances;
4. compute the fixed manufacturing overhead spending and production volume variances;
5. using standard costing to provide the complete entries necessary to record:

1. the use of direct materials (assume that the material price variance is

recorded at the time that direct materials are used);

2. the use of direct labor;
3. the incurrence of actual VMOH;
4. the incurrence of actual FMOH;
5. enter VMOH and FMOH in the WIP account;
6. the variances for VMOH and FMOH;
7. the adjustment to CGS using the write-off variances to cost of goods sold approach.