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Fortes Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on

Fortes Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

The company has reported the following actual results for the product for April:

Required:

a. Compute the materials price variance for April.

b. Compute the materials quantity variance for April.

c. Compute the labor rate variance for April.

d. Compute the labor efficiency variance for April.

Part B (5 marks)

ABC Company uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of machine hours. The company's condensed flexible budget for manufacturing overhead is given below:

Per Machine Hour

Machine Hours

20,000

25,000

30,000

Variable Overhead Costs

$3

$60,000

$75,000

$90,000

Fixed Overhead Costs

$300,000

$300,000

$300,000

Total Overhead Costs

$360,000

$375,000

$390,000

The denominator level of activity is 30,000 machine hours. Standards call for 2.5 machine hours per unit of output. Actual activity and manufacturing overhead costs for the year are given below:

Units Produced

12,800 units

Machine Hours used

31,600 machine hours

Overhead Costs incurred:

Variable Costs

$96,000

Fixed Costs

$297,000

Required:

a) What was the fixed overhead budget variance? (2 marks) b) What was the fixed overhead volume variance? (3 marks)

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