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 Standard Price or Rate $5.00 per kilogram Standard Cost $ 6.50 $5.00 per hour 4.50 Variable manufacturing overhead 0.40 machine-hours $4.00 per machine-hour 1.60 Total standard cost $12.60 The plant has been having problems for some time, as is shown by its December income statement when it produced and sold 15,100 rinks; the normal amount is 15,250 rinks per month. Fixed costs are allocated using machine-hours. Sales (15,100 rinks) Less: Variable expenses: Variable cost of goods sold Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses: Manufacturing overhead Flexible Budgeted $ 453,000 Actual $ 453,000 190,260 206,893 20,100 20,100 210,360 226,993 242,640 226,007 131,000 131,000 84,560 84,560 215,560 215,560 Selling and administrative Total fixed expenses Net income $ 27,080 $ 10,447 "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: 39 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. 30,200 kilograms of materials were purchased at a cost of $3.90 per kilogram. b. 24,600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) c. 11,600 direct labour-hours were worked at a cost of $8 per hour. d. Variable manufacturing overhead cost totalling $24,313 for the month was incurred. A total of 5,930 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 (ie, zero variance).) Labour rate vanance 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 (ie, zero variance).) Variable overhead spending variance Variable overhead efficiency variance