For a car model, Ford Motor Company has set the following standard costs:

| Direct Materials | 300 kg at $4 per kg | | Direct Labor | 15 hours at $25 per hour | | Variable Overhead| $1,500 per unit | | Fixed Overhead | $600 million per year |

If 150,000 units were produced, calculate the total standard cost and the total actual cost incurred.

Required:

• Determine the direct materials price variance and quantity variance.
• Calculate the direct labor rate variance and efficiency variance.
• Analyze the variable overhead spending variance.
• Calculate the fixed overhead budget variance.
• Explain the implications of variance analysis for cost management decisions.