Maple Leaves Inc. produces portable ice rinks. The standard cost for one rink is as follows: Direct materials Direct labour Variable manufacturing overhead Standard Quantity or Hours 1.30 kilograms 0.80 hours 0.50 machine-hours Standard Price or Rate $4.00 per kilogram $5.00 per hour $2.00 per machine-hour Total standard cost The plant has been having problems for some time, as is shown by its December income state rinks; the normal amount is 15,350 rinks per month. Fixed costs are allocated using machine-h Sales (15,200 rinks) Less: Variable expenses: Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses Flexible Budgeted $ 456,000 Actual $ 456,000 155,040 200,329 20,300 20,300 175,340 220,629 280,660 235,371 132,000 132,000 85,120 85,120 217,120 217,120 Net income $ 63,540 $ 18,251 *Contains direct materials, direct labour, and variable manufacturing overhead. aves Inc. produces portable ice rinks. The standard cost for one rink is as follows: Standard Quantity or Hours 1.30 kilograms materials Labour 0.80 hours manufacturing overhead 0.50 machine-hours andard cost Standard Price or Rate $4.00 per kilogram $5.00 per hour $2.00 per machine-hour Standard Cost $ 5.20 4.00 1.00 $10.20 has been having problems for some time, as is shown by its December income statement when normal amount is 15,350 rinks per month. Fixed costs are allocated using machine-hours. 5,200 rinks) riable expenses: Le cost of goods sold* Le selling expenses -iable expenses ion margin ed expenses: turing overhead and administrative ed expenses e Flexible Budgeted $ 456,000 Actual $ 456,000 155,040 200,329 20,300 20,300 175,340 220,629 280,660 235,371 132,000 132,000 85,120 85,120 217,120 217,120 $ 63,540 $ 18,251 irect materials, direct labour, and variable manufacturing overhead. b. Direct labour rate and efficiency variances. (Indicate the effect of each variance b 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 v unfavourable, and "None" for no effect (i.e., zero variance).) Variable overhead spending variance Variable overhead efficiency variance N P W Prey 1 of 17 Ne *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 op the income statement showed that the problem could be due to the variable cost of goods sold. Eastwood learns the fo operations and costs in December: a. 30,400 kilograms of materials were purchased at a cost of $3.70 per kilogram. b. 24,600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignific be ignored.) c. 11,900 direct labour-hours were worked at a cost of $8 per hour. d. Variable manufacturing overhead cost totalling $15,849 for the month was incurred. A total of 5,870 machine-hours wa 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 unfavourable, and "None" for no effect (i.e., zero variance).) Material price variance Material quantity variance Prev 1 of 17 Next