Clarissa McWhirter, vice$-$president of Cyprus Company, was pleased to see a small variance on the income statement after the trouble the company had been having in controlling manufacturing costs. She noted that the $$18,500$ overall manufacturing variance reported last period was well below the $3\%$ limit that had been set for variances. The company produces and sells a single product. The standard cost card for the product follows:

Standard Cost Card$$Per Unit

Direct materials, $4$ metres at $$3\mathrm{.}00$ per metre $ $12$

Direct labour, $1\mathrm{.}5$ direct labour$-$hour at $$16$ per direct labour$-$hour $24$

Variable overhead, $1\mathrm{.}5$ direct labour$-$hour at $$4$ per direct labour$-$hour $6$

Fixed overhead, $1\mathrm{.}5$ direct labour$-$hour at $$6$ per direct labour$-$hour $9$

Standard cost per unit $ $51$

The following additional information is available for the year just completed:

The company manufactured $20,000$ units of product during the year.

A total of $78,000$ metres of material was purchased during the year at a cost of $$3\mathrm{.}25$ per metre. All of this material was used to manufacture the $20,000$ units. There were no beginning or ending inventories for the year.

The company worked $32,500$ direct labour$-$hours during the year at a cost of $$15$ per hour.

Overhead cost is applied to products on the basis of standard direct labour$-$hours. Data relating to manufacturing overhead costs follow:

Denominator activity level $($direct labour$-$hours$)25,000$

Budgeted fixed overhead costs $($from the flexible budget$)$ $ $150,000$

Actual fixed overhead costs $ $148,000$

Actual variable overhead costs $ $123,500$

Required:

$1.$ Compute the direct materials price and quantity variances for the year. $($Indicate the effect of each variance by selecting $"$F$"$ for favorable, $"$U$"$ for unfavorable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

$2.$ Compute the direct labour rate and efficiency variances for the year. $($Indicate the effect of each variance by selecting $"$F$"$ for favorable, $"$U$"$ for unfavorable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

$3.$ For manufacturing overhead, compute the following:

a$.$ The variable overhead spending and efficiency variances for the year. $($Indicate the effect of each variance by selecting $"$F$"$ for favorable, $"$U$"$ for unfavorable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

b$.$ The fixed overhead budget and volume variances for the year. $($Indicate the effect of each variance by selecting $"$F$"$ for favorable, $"$U$"$ for unfavorable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

$4.$ Compute the total variance. $($Indicate the effect of each variance by selecting $"$F$"$ for favorable, $"$U$"$ for unfavorable, and "None" for no effect $($i$.$e$.,$ zero variance$).$ Input all amounts as positive values.$)$

Prev