Exercise 16-40 (Algo) Variable Cost Variances (LO 16-5) Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 125,000 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor (3 pounds @ $2) (0.25 hours @ $32) $6 8 Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products Sales revenue Less variable costs Direct materials Direct labor Variable overhead $ 12,800 8201 1,012 535 $2,367 Total variable costs. Contribution margin- Less fixed costs. Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs Operating profit $10,433 1,890 2,135 $4,025 $ 6,408 During the year, the company purchased 325,000 pounds of material and employed 33,900 hours of direct labor Required: a. Compute the direct materials price and efficiency variances b. Compute the direct labor price and efficiency variances. c. Compute the variable overhead price and efficiency variances. Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. a Direct materials Price variance Efficiency variance b. Direct labor Price variance Efficiency variance c Variable overhead Price variance Efficiency variance