Foster Corporation uses a standard cost system. There is no beginning or ending work in process, and finished goods inventory balances.
The following information was provided concerning the one product produced by this company for the period that just ended:
This company used Direct labor hours as the cost driver for the application of overhead.
		Actual price per kilogram	$2.94
		Actual kilograms of material used	31,500
		Actual kilograms of material purchased	32,000
		Actual hourly labor rate	$17.49
		Actual hours of production	4,900	labor hrs.
		Standard price per kilogram	$2.96
		Standard kilograms per completed unit	6
		Standard hourly labor rate	$17.90
		Standard time per completed unit	1	Hour
		Actual Variable factory overhead	$17,395.00
		Actual Fixed factory overhead	$18,200.00
		Standard fixed factory overhead rate	$3.25	per labor hour
		Standard variable factory overhead rate	$3.80	per labor hour
		Budgeted fixed overhead	$18,300.00
		Units completed during the period	4,950
You have just been hired by a local plastic pool manufacturer to determine if they are controlling their costs.
You have decided to use your recent knowledge of variance analysis from chapters 10 and 11 to assist you in this endeavor.
You will analyze the variances as stated in the requirements below.
Required: Make sure you do not forget to label the variances U or F.
1. Calculate the direct materials price and quantity variance.
Direct-material purchase price variance should be based on material purchased, since you want to isolate the variance as soon as possible. See bottom page 418
Direct-material Quantity variance should be based on materials used, since this is monitoring the production efficiency. See top of page 418.
Direct-material purchase price variance
Direct Material Quantity variance
2. Calculate the direct labor rate and efficiency variances.
Direct Labor rate variance
Direct Labor Efficiency variance
3. Variable manufacturing overhead spending and efficiency variances.
Variable overhead spending variance
Variable overhead efficiency variance
4. Fixed manufacturing overhead spending and volume variances.
Fixed Manufacturing overhead spending variance
Fixed overhead volume variance
5. Pick out the one most significant variance that you computed above and explain to me the possible causes of this variance and why you chose it.