Direct materials Direct labour Maple Leaves Inc. produces portable ice rinks. The standard cost for one rink is as follows: Standard Quantity or Hours 1.30 kilograms 0.90 hours $5.00 per hour Standard Price or Rate $4.00 per kilogram Standard Cost $ 5.20 4.50 Variable manufacturing overhead 0.40 machine-hours $3.00 per machine-hour Total standard cost 1.20 $10.90 The plant has been having problems for some time, as is shown by its December income statement when it produced and sold 14,900 rinks; the normal amount is 15,050 rinks per month. Fixed costs are allocated using machine-hours. Flexible Budgeted $ 447,000 Actual $ 447,000 Sales (14,900 rinks) Less: Variable expenses: Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses 162,410 19,900 202,164 19,900 182,310 222,064 264,690 224,936 129,000 129,000 83,440 83,440 212,440 212,440 Net income $ 52,250 $ 12,496 *Contains direct materials, direct labour, and variable manufacturing overhead. Madison Eastwood, the general manager wants to get things under control. She needs information about December operations since the income statement showed that the problem could be due to the variable cost of goods sold. Eastwood learns the following about operations and costs in December: a. 30,900 kilograms of materials were purchased at a cost of $3.90 per kilogram. b. 24,500 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) c. 11,800 direct labour-hours were worked at a cost of $7 per hour. d. Variable manufacturing overhead cost totalling $24,654 for the month was incurred. A total of 5,870 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. Compute the following variances for December: a. Direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Material price variance Material quantity variance b. Direct labour rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Labour rate variance Labour efficiency variance c. Variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Variable overhead spending variance Variable overhead efficiency variance