Nevue Co. (Nevue) manufactures special electrical equipment and parts. Nevue employs a standard cost accounting system with separate standards established for each product.

One of the products produced by Nevue is a digital tablet. Production volume is measured by direct labour hours in the production of the tablets, and a flexible budget system is used to plan and control department overhead.

The standard cost of one tablet for the year was calculated at $73.75 as follows:

Direct materials:
A (5 units $1.75)	$ 8.75
B (3 units $2.50)	7.50
Direct labour (2 hours $21)	42.00
Variable overhead (2 hours $1.50)	3.00
Fixed overhead (2 hours $6.25)	12.50
	$73.75

Overhead rates are based upon normal capacity for the year, which is estimated at 50,000 direct labour hours.

During the year, 27,000 tablets were produced. The budgeted selling price was $180 per unit, and the actual selling price was $175 per unit.

The following costs were incurred during the year:

Purchase and use of:
Direct material A (137,500 units $1.79)	$ 246,125
Direct material B (82,000 units $2.45)	200,900
Direct labour (52,800 hours $21.30)	1,124,640
Variable overhead	87,000
Fixed overhead	306,000

8)

Required:

a) Prepare an income statement schedule showing the following columns:

static budget, flexible budget, actual, and variance. Use the contribution format.

(6 marks)

2. Using the information in the income statement schedule prepared in part (a), calculate the sales price variance, sales volume variance, and fixed overhead budget variance. (2 marks)
3. Calculate the following cost variances:
   1. direct materials price variance for direct material A (1 mark)
   2. direct labour efficiency variance (1 mark)

variable overhead spending variance (1 mark) iv. fixed o