Plastic Company manufactures one product, called XXY, used in the plastic industry. The company prepares its budget on the basis of standard costs. The following planned and actual data are for December 2018.

XXY

Standard Data:

Direct Materials

4 kg @ 1.10/Kg

Direct Labor

6 hs @ 5/hour

Variable Overhead (per DL hour)

3.50

Fixed Overhead

26,520

Expected Activity (in DL hours)

7,800 DL hours

Actual Data:

Direct Materials

4,700 Kg @ 1.15/Kg

Direct Labor

7,400 hours @ 5.10/hour

Variable Overhead

25,234

Fixed Overhead

26,400

Units Produced

1,200

Required:

a. Prepare a variance analysis for each variable cost component of XXY (hint: actual quantities of direct materials that were purchased equal the actual direct material quantities used into production).

b. Prepare a fixed overhead variance analysis, assuming that Plastic Company applies fixed overhead based on expected volumes (i.e., units).