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 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. Actual Budget Variance Cases produced and sold 10.250 9.950 300 Favorable Sales revenue $1,937.800 $1,860,700 $77,100 Favorable Less variable expenses Direct material 558,195 547,250 10,945 Unfavorable Direct labor 266,312 258,700 7,612 Unfavorable Variable manufacturing overhead 283,587 278,600 4,987 Unfavorable Variable selling expenses 92,664 89,550 3,114 Unfavorable Variable administrative expenses 41,531 39,800 1,731 Unfavorable Total variable expense 1,242,289 1,213,900 28,389 Unfavorable Contribution margin 695,511 646,800 48,711 Favorable Less fixed expenses Fixed manufacturing overhead 110,445 109,450 995 Unfavorable Fixed selling expenses 69,153 69,650 (497 Favorable) Fixed administrative expenses 129.151 129,350 (199 Favorable) Total fixed expense 308,749 308,450 299 Unfavorable Operating income $386,762 $338,350 $48,412 Favorable 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 $558,195 Direct materials used: 101,490 pounds Direct labor hours worked: 26,368 at a total cost of $266,312 Machine hours lised.40 745 Irvin also found the standard cost card for a case of product. Standard Cost Standard Price Standard Quantity Direct materials $5.50 per pound 10 pounds $55 Direct labor $10 per DLH 2.59 DLH 25.90 Variable overhead $7 per MH 4 MH 28.00 Fixed overhead $2.74 per MH 4 MH 10.96 Total standard cost per case $119.86 (a-b) Calculate the direct material price variance and direct material quantity variance for the Direct material price variance $ Direct material quantity variance $ (c-d) Calculate the direct labor rate variance and direct labor efficiency variance for the month Direct labor rate variance $ Direct labor efficiency variance $ (e-f) Calculate the variable overhead spending variance and variable overhead efficiency varia Variable overhead spending variance $ Variable overhead efficiency variance $ (g) Calculate the fixed overhead spending variance for the month. (If variance is zero, select "Not $ Fixed overhead spending variance Prepare a performance report that will assist Lexi in evaluating her efforts to control production costs. (If variance is zero, select "Not Applicable" and enter Ofor the amounts.) Price/Rate/Spending Variance Quantity/Efficiency Variance Direct materials $ $ Direct labor Variable overhead Fixed overhead Total $ $ e Textbook and Media Based on your review of the performance report you prepared, do you think Lexi did a good job of controlling production expenses during the month
