J L M N O P Q R B C D E F G H I 1 Part 2 Cost variance analysis 2 This part relates to Module 23. I have variance analysis support material in the Module 23 folder in course resources. 4 Gourmet, Inc. produces containers of frozen food. During October the company had the following actual production and costs. Actual Containers produced in October 720 Variable Overhead $5,700 Fixed Overhead $13,000 Direct Labor cost $80,000 Which is 3,900 Direct labor hours Actual material purchased $28,000 Which is 15,000 pounds Actual Material pounds used 14,600 pounds 12 Overhead is budgeted and applied using direct-labor hours. Standard cost and annual budget information are as follows: Direct Labor Direct Material $19.75 $2.00 $99 $40 Standard cost per container 5 hours at 20 pounds at Direct labor 5 hours at Direct Variable overhead $1.50 $7.50 labor 5 hours at $3.00 Fixed Overhead Total $15 $161.25 Budgeted Monthly Fixed Overhead $12,500 23 Required: Make sure you do not forget to label the variances U or F. You need to show your work either by cell reference or showing your calculation to the side. 24 1. Calculate the direct materials price and quantity variance. Please note that the materials price variance is based on actual material purchased and the quantity variance is based on material used. 25 Materials price variance 26 Materials Quantity variance 28 2. Calculate the direct labor rate and efficiency variances. 29 Labor rate variance 30 Labor Efficiency variance 32 3. Calculate the variable overhead spending and efficiency variances. 33 Variable overhead spending variance 34 Variable overhead efficiency variance 35 36 4. Calculate the fixed overhead budget variance. 37 Fixed overhead budget variance 39 5. Pick out the two variances that you computed above that you think should be further investigated. Explain why you picked these 2 variances and what might be the possible cause of the variances. -10