Cole manufactures coffee mugs that it sells to other companies for customizing with their own logos. Cole prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month (Click the icon to view the cost data.) Actual cost and production information for July 2018 follows: (Click the icon to view actual cost and production information) Read the requirements = Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor. Begin with the cost variances Select the required formulas, compute the cost variances for direct materials and direct labor and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used AC = actual cost AQ = actual quantity, FOH = fixed overhead SC = standard cost: SQ = standard quantity) Formula Variance - X Requirements Direct materials cost variance Direct labor cost variance 1. Compute the cost and efficiency variances for direct materials and direct labor. 2. Journalize the purchase and usage of direct materials and the assignment of X direct labor, including the related variances Data table 3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances 4. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs Direct Materials (0.2 lbs @ $0.25 per lb) $ 0.05 from Work-in-Process Inventory. Joumalize the adjusting of the Manufacturing Overhead account Direct Labor (3 minutes @ $0.14 per minute) 0.42 6. Cole intentionally hired more highly skilled workers during July. How did this Manufacturing Overhead decision affect the cost variances Overall, was the decision wise? Variable (3 minutes @ $0.04 per minute) S S 0.12 0.39 Fixed (3 minutes @ $0.13 per minute) 0.51 - X Total Cost per Coffee Mug $ 0.98 More info a. There were no beginning or ending inventory balances. All expenditures were on account Print Done b. Actual production and sales were 62,900 coffee mugs. C. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per lb d. Actual direct labor usage was 202,000 minutes at a total cost of $32,320. e. Actual overhead cost was $5,050 variable and $35,650 fixed. f. Selling and administrative costs were $98,000. Print Done