1. Gina in the Kings Road Inc., makes naugahyde chairs. The company uses two main materials to make the furniture, wood and leather. The companys standard costs for materials and labor are as follows (wood in boards and leather in pounds, variable/fixed overhead based on machine hours). Overhead costs are allocated to production based on machine hours.

Wood 19 boards $ 5.90 per board $ 112.10

Leather 28 pounds $ 8.40 per pound 235.20

Direct Labor 5.5 DL hours $ 19.00 per DL hour 104.50

Variable Manufacturing Overhead 2.3 M hours $ 8.50 per M hour 19.55

Fixed Manufacturing Overhead 2.3 M hours $ 18.00 per M hour 41.40

(Note: Denominator level of 9200 M hours, budgeted production 4000 units, and budgeted fixed overhead of $ 165,600.)

Total standard cost per unit $ 512.75

The months results are as follows:

Production and sales 4100 units. Actual fixed overhead costs incurred were $ 161,000. Fixed manufacturing overhead is allocated to finished units using the per unit amount listed above.

Purchases of wood this month were 75,000 boards for $ 5.65 each, the wood beginning inventory consisted of 7,000 boards at a total cost of $41,300, the months ending inventory was 4,500 boards.

Purchases of leather this month were 116,400 pounds for $ 8.55 each, the leather beginning inventory was 2,500 pounds at a total cost of $21,000, the months ending inventory was 4,600 pounds.

Finished goods and work in process inventories are insignificant and can be ignored.

Assembly workers worked 21,250 direct labor hours at an average cost of $ 19.25 a DL hour.

9,610 machine hours were used at an average variable overhead cost of $ 8.65 per M hour.

It is the companys policy to close all overhead variances to cost of goods sold on a monthly basis.

Compute the companys Material variances for price and efficiency separately each for wood and for leather, the labor price and efficiency variances, and the variable and fixed overhead spending and efficiency/production volumne variances. Was fixed manufacturing overhead over or under allocated? By how much?