Diversified Company produces a number of products, including a small American flag. The firm, which began

operations at the beginning of the current year, uses a standard cost system. The standard costs for one American

Flag are provided below:

Direct material (0.5 yd. @ $1.00)

$ 0.50

Direct labor (1 hr. @ $10.00)

10.00

Variable overhead (1 hr. @ $1.00)

1.00

Fixed overhead (1 hr. @ $0.50)

.50

$ 12.00

The $0.50 fixed overhead rate is based on total budgeted fixed overhead costs of $17,000. There were no changes

in any inventory accounts during the period. The company produced and sold 35,000 units at the following costs:

Direct materials (18,000 yds.)

$ 17.280

Direct labor (36,000 hrs.)

374.400

Variable factory overhead

34,200

Fixed factory overhead

15,000

Required:

Compute and label as Favorable (F) or Unfavorable (U) the following flexible budget variances:

A - Direct materials price variance

B - Direct materials usage variance

C - Direct labor price variance

D

- Direct labor usage variance

E

- Total variable overhead variance