CRX Industries Inc. manufactures a lid for a hydroponic garden planter.The standard cost for one planter is as follows:

Std. Quality of Hours

Standard Price or Rate

Standard Cost

Direct Materials

2.2 kgs

$6.50

$14.30

Direct Labour

.45 hours

$9.00

$4.05

Variable Mfg. Overhead

.20 machine hours

$2.50 per machine hour

$0.50

Total Std. Cost

$18.85

The plant has been experiencing problems for some time, as is shown by its June income statement when it made and sold 15,000 planters; the normal volume is 15,150 planters per month. Fixed costs are allocated using machine-hours.

Flexible Budget

Actual

Sales (15,000 planters)

$750,000

$750,000

Less: Variable Expenses:

Variable COGS*

$282,750

$305,000

Variable Selling Exp.

$25,000

$ 25,000

Total Variable Expenses

$307,750

$330,000

Contribution Margin

$442,500

$420,000

Less: Fixed Expenses:

Mfg. Overhead

$260,580

$260,5680

Selling and Admin

$105,000

$105,000

Total Fixed Expenses

$366,580

$366,580

Net Income

$75,920

$53,420

* Includes direct materials, labour and variable mfg. overhead

Joe Bidenold, the general manager of the Plant, wants to get things under control. He needs information about the operations in June since the income statement signaled that the problem could be due to the variable cost of goods sold. Bidenold learns the following about operations and costs in June:

1. 50,000 kilograms of materials were purchased at a cost of $6.25 per kilogram.
2. 34,600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.)
3. 14,800 direct labour-hours were worked at a cost of $10 per hour.
4. Variable manufacturing overhead cost totaling $28,290 for the month was incurred. A total of 7,900 machine hours was recorded.

It is the company's policy to close all variances to cost of goods sold on a monthly basis.

Required:

1.Pick 2 of the threebelow and calculate the following variances for June:

1. Direct materials price and quantity variances.(10 marks)
2. Direct labour rate and efficiency variances. (10 marks)
3. Variable overhead spending and efficiency variances.(10 marks)

Do only two of three choices.

2.Is Joe Bidenold correct in his assumption, please explain, if not why?