Maple Leaves Inc. produces portable ice rinks. The standard cost for one rink is as follows: Standard Quantity or Hours 1. 30 kilograms Standard Cost Direct materials Standard Price or Rate $4.00 per kilogram $ 5.20 Direct labour 0.80 hours Variable manufacturing overhead 0.40 machine-hours $6.00 per hour $2.00 per machine-hour 4.80 Total standard cost 0.80 $10.80 The plant has been having problems for some time, as is shown by its December income statement when it produced and sold 15,200 rinks; the normal amount is 15,350 rinks per month. Fixed costs are allocated using machine-hours. Flexible Budgeted 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 Net income $ 456,000 Actual $ 456,000 164, 160 179, 090 20, 300 20, 300 184, 460 199, 390 271, 540 256, 610 132, 000 132, 000 85, 120 85, 120 217, 120 217, 120 $ 54, 420 $ 39, 490 *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. 30,700 kilograms of materials were purchased at a cost of $3.00 per kilogram. b. 24,200 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) c. 11,900 direct labour-hours were worked at a cost of $8 per hour. d. Variable manufacturing overhead cost totalling $17,790 for the month was incurred. A total of 5,930 machine-hours was recorded. 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 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).) Variable overhead spending variance Variable overhead efficiency variance