DuRoss Company produces coats. The company uses a standard costing system and has set the following standards for materials and labor: Fabric (8 yards @ $6) Direct labor (2 hours @ $18) Variable MOH (2 hours @ $4.50) The allowable deviation for investigation is +/- 5%. During the year, DuRoss produced 8 yards at $ 6.00 2 hours at $ 18.00 2 hours at $ 4.50 The actual fabric purchased was 55,000 460,000 yards at coats $ 5.50 per yard There were no beginning or ending inventories of fabric. The actual direct labor is The actual variable manufacturing overhead is $ 120,000 hours at 510,000 $ 19.25 per hour Required: a) through e) a) Compute the cost of fabric, direct labor, and variable manufacturing overhead that should be incurrred for the production of 55,000 coats. Material cost Labor cost Variable Manufacturing Overhead 2,640,000 1,980,000 495,000 b) Compute the material and labor variances Material price variance Material usage variance Labor rate variance Labor efficiency variance Variable Overhead spending variance Variable Overhead efficiency variance $ F/U 230,000 F 120,000 U 150,000 180,000 U c) Which variances need to be investigated? Explain each one as to why or why not. Material price variance Material usage variance Labor rate variance Labor efficiency variance Variable Overhead spending variance Variable Overhead efficiency variance d) For each variance that must be investigated: 1) Who would you approach to start the investigation? 2) What questions would you ask? 1) 2) MPV MUV LRV LEV VOSV VOEV Who to approach Variance +/- Deviation Yes or No Questions to ask (may be more than one) Material price variance Material usage variance Labor rate variance Labor efficiency variance Variable Overhead spending variance Variable Overhead efficiency variance e) Give at least one scenario of what happened which would cover all of the items that you are investigating