Managerial accounting

Question 2 (15 points) A company manufactures gadgets and applies manufacturing overhead on the basis of machine hours The company plans to operate at a denominator activity level of 27,000 machine hours and to produce 9,000 units. The standard cost for the product follows: . Direct Labour: 1.5 hours per gadget at $15.00 per hour Direct Material: 0.75 kgs per gadget at $10.00 per kg Variable Overhead: 3 hours per gadget at $9.00 per hour Fixed Overhead: 3 hours per gadget at $12.00 per hour Expected production (flexible budget): 9,000 units . . During the first quarter the company produced 10,000 units using 29,000 machine hours. Production data (actuals) for the quarter is as follows: Direct material: purchased 10,000 kgs at a total cost of $95.000. 8.000 kgs were used in production. Direct Labour: 16,000 hours were worked at a total cost of $240,000. Variable overhead: actual cost for Q1 was $268,250. Fixed overhead: actual cost for Q1 was $362,500. . . Required (show calculations to support your answer): 1. Determine the direct material price variance. (3 marks) 2. Determine the direct labour efficiency variance. (3 marks) 3. Determine the variable overhead spending variance. (3 marks) 4. Calculate the fixed overhead volume variance. (8 marks) 5. Conclude on whether total overhead was over or under applied and support