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Problem 6-30 Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 30D cases of the production line before the end of the month But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficency and reduce costs. Yet th report, shown below, showed a different story. Actual Cases produced and sald Sales revenue Direct material Direct labor Variable manufacturing overhead Variable selling expenses 9,950 1,937,800 $1,860,700 547,250 258,700 278,600 89,550 39,800 10,250 300 Favorable 77,100 Favorable 558,195 266,312 283,587 92,664 10,945 Unfavorable 7,612 Unfavorable 4,987 Unfavorable 3,114 Unfavorable 1,731 Unfavorable Variable administrative expenises41.334% od Contribution margin Fixed manufacturing overhead Fixed selling expenses 48,711 Favorable 695,511 646 8n 110,445 69,153 109,450 69,650 129,350 $338,350 995 Unfavorable 497 Favorable Fixed administrative expenses 12,151 129350 199 Favorable Operating income 386,762 $48,412 Favorable Lexi picked up the phone and called Irvin. Irvin,1 dont get it. We beat the budgeted operating income for the month, but loak at all the unfavorable variances on the operating costs. Can you help me understand what's going on? "Let me look into it and Ill get back to you," Irvin replied Irvin gathered the followingo additional information about the month's performance. - Direct materials purchased: 101,490 pounds at a total of $558,195 . Direct materials used: 101,490 pounds . Direct labor hours worked: 26,368 at a total cost of $266,312 Machine hours used: 40,745 Irvin also found the standard cost card for a case of product Drect materials Direct labor Variable overhead Fixed overhead Total standard cost per case $5.50 per pound $10 per DLH $7 per MH $2.74 per MH 10 pounds 2.59 DLH 4 MH 4 MH $55 25.90 28.00 10.96 (a-b) Calculate the direct material price variance and direct material quantity variance for the month. (If varlance is zero, select "Not Applicable" and enter O for the amounts Direct material price variance Direct material quantity variance (c-d) Caloulate the direct labor rate variance and direct labor efficiency variance for the month. (Round answers to 0 decimal places, e.g. 1525. If varlance is zero, select "Not Applicable" and enter O for the amounts) Direct labor rate variance Direct labor efficiency variance (e-f) Calculate the variable overhead spending variance and variable overhead efficiency variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts. Variable overhead spending variance Variable overhead efficiency variance (g) Caloulate the fixed overhead spending variance for the month. (If varance is zero, select "Not Applicable" and enter 0 for the amounts.) Fixed overhead spending variance Prepare a performance report that will assist Lexi in evaluating her efforts to contral production costs. (If variance is zero, s select "Not Applicable" and enter for t the amounts.) Direct materials Direct labor Variable overhead Fixed overhead Total Not Applcable Favorable Unfavorable Based on your review of the performance report you prepared, do you think Lexi did a good job of controlling production expenses duning the month
