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 300 cases off 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 at how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficiency and reduce costs. Yet the report, shown below, showed a different story.

ActualBudgetVarianceCases produced and sold10,2509,950300FavorableSales revenue$1,937,800$1,860,700$77,100FavorableLess variable expenses

Direct material558,195547,25010,945UnfavorableDirect labor266,312258,7007,612UnfavorableVariable manufacturing overhead283,587278,6004,987UnfavorableVariable selling expenses92,66489,5503,114UnfavorableVariable administrative expenses41,53139,8001,731UnfavorableTotal variable expense1,242,2891,213,90028,389UnfavorableContribution margin695,511646,80048,711FavorableLess fixed expenses

Fixed manufacturing overhead110,445109,450995UnfavorableFixed selling expenses69,15369,650(497Favorable)Fixed administrative expenses129,151129,350(199Favorable)Total fixed expense308,749308,450299UnfavorableOperating income$386,762$338,350$48,412Favorable

Lexi picked up the phone and called Irvin. "Irvin, I don't get it. We beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating costs. Can you help me understand what's going on?" "Let me look into it and I'll get back to you," Irvin replied.

Irvin gathered the following additional information about the month's performance.

Direct materials purchased: 101,490 pounds at a total of $558,195Direct materials used: 101,490 poundsDirect labor hours worked: 26,368 at a total cost of $266,312Machine hours used: 40,745

Irvin also found the standard cost card for a case of product.

Standard PriceStandard QuantityStandard CostDirect materials$5.50 per pound10 pounds$55Direct labor$10 per DLH2.59 DLH25.90Variable overhead$7 per MH4 MH28.00Fixed overhead$2.74 per MH4 MH10.96Total standard cost per case$119.86

Your answer is partially correct.Try again.

(a-b)Calculate the direct material price variance and direct material quantity variance for the month.(If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Direct material price variance$

Unfavorable

Not Applicable

Favorable

Direct material quantity variance$

Not Applicable

Unfavorable

Favorable

(c-d)Calculate the direct labor rate variance and direct labor efficiency variance for the month.(Round answers to 0 decimal places, e.g. 1,525. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Direct labor rate variance$

Not Applicable

Unfavorable

Favorable

Direct labor efficiency variance$

Not Applicable

Favorable

Unfavorable

(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$

Favorable

Unfavorable

Not Applicable

Variable overhead efficiency variance$

Favorable

Not Applicable

Unfavorable

(g)Calculate the fixed overhead spending variance for the month.(If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Fixed overhead spending variance$

Not Applicable

Unfavorable

Favorable