Maple Leaves Inc. produces portable ice rinks. The standard cost for one rink is as follows: Standard Quantity or Hours 1.40 kilograms 0.80 hours Standard Cost Direct materials Direct labour Standard Price or Rate $5.00 per kilogram $6.00 per hour $ 7.00 4.80 Variable manufacturing overhead 0.40 machine-hours $2.00 per machine-hour 0.80 Total standard cost $12.60 The plant has been having problems for some time, as is shown by its December income statement when it produced and sold 14,800 rinks; the normal amount is 14,950 rinks per month. Fixed costs are allocated using machine-hours. Flexible Budgeted Sales (14,800 rinks) Less: Variable expenses: Variable cost of goods sold Variable selling expenses $ 444,000 Actual $444,000 186,480 193,250 19,700 19,700 Total variable expenses 206,180 212,950 Contribution margin 237,820 231,050 Less: Fixed expenses: Manufacturing overhead 128,000 128,000 Selling and administrative 82,880 82,880 Total fixed expenses 210,880 210,880 Variable selling expenses 19,700 19,700 Total variable expenses 206,180 212,950 Contribution margin 237,820 231,050 Less: Fixed expenses: Manufacturing overhead 128,000 128,000 Selling and administrative 82,880 82,880 Total fixed expenses 210,880 210,880 $ 26,940 $ 20,170 Net income "Contains direct materials, direct labour, and variable manufacturing overhead. Madison Eastwood, the general manager wants to get things under control. She needs information about December operations since the income statement showed that the problem could be due to the variable cost of goods sold. Eastwood learns the following about operations and costs in December: a. 31,200 kilograms of materials were purchased at a cost of $4.00 per kilogram. b. 24,500 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) c. 11,800 direct labour-hours were worked at a cost of $7 per hour. d. Variable manufacturing overhead cost totalling $19,350 for the month was incurred. A total of 4,300 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis. Saved Help Save & Exit It is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: 1. Compute the following variances for December: a. Direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Material price variance Material quantity variance Save & Exit b. Direct labour rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Labour rate variance Labour efficiency variance c. Variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) c. Variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Variable overhead spending variance Variable overhead officiency variance