Question
Gonzo Corp. makes magic kits. Most of the indirect costs used to make these kits are associated with the workers putting together the kits.
Gonzo Corp. makes magic kits. Most of the indirect costs used to make these kits are associated with the workers putting together the kits. This means that Gonzo Corp. allocates variable and fixed manufacturing overhead on the basis of direct labor hours. On January 1st, Gonzo Corp. planned on making 7,600 kits for the quarter. They believed it would take 4,560 machine hours and 9,120 direct labor hours to make the magic kits. They believed their total manufacturing overhead would be $33,744, with $21,888 coming from variable manufacturing overhead. On April 1st, Gonzo Corp. found that for the 1st quarter of the year they had made 7,640 kits and that on average, each kit took .5 machine hours and 1.25 direct labor hours to make. Their manufacturing overhead ended up being $35,335, with $11,460 coming from fixed manufacturing overhead. Using this information please conduct a 4-variance analysis for manufacturing overhead. (Round all numbers to 2 decimal places):
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