Problem 1. (20 Points).

Tiger, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units:

Total variable overhead .	$240,000
Total fixed overhead .	560,000
Total overhead .	$800,000

The standard cost per unit when operating at this same 80% capacity level is:

Direct materials (5 lbs. @ $4/1b.)	$20.00
Direct labor (2 hrs. @ $8.75 hr.) .	17.50
Variable overhead (2 hrs. @ $3/hr.)	6.00
Fixed overhead (2 hrs. @ $7/hr.) .	14.00
Total cost per unit .	$57.50

The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were:

Direct materials (150,350 lbs.) .	$616,435
Direct labor (59,800 hrs.) .	520,260
Variable overhead .	192,000
Fixed overhead .....	552,000

Calculate the following variances and indicate whether each is favorable or unfavorable.

Direct materials:
Price variance
Quantity variance
Direct labor:
Rate variance
Efficiency variance
Variable overhead:
Spending variance
Efficiency variance
Fixed overhead:
Spending variance
Volume variance

Problem 2. (20 Points).

The following information comes from the records of Barney Co. for the current period.

a. Compute the direct materials price and quantity variances, direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable.

b. Prepare the journal entries to charge direct materials and direct labor costs to work in process and the materials and labor variances to their proper accounts.

Actual costs and quantities:
Direct materials used	37,000 feet @ $6.20 per foot
Direct labor hours used	50,660 hours
Direct labor rate per hour .	$16.50
25,000 units were produced during the period.
Standard costs and quantities per unit:
Direct materials	1.5 ft. @ $6.10 per ft.
Direct labor ...	2 hours @ $17 per hour