Problem: 1

Vernon Mills, Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs per unit of product for a recent period are given below for one of the company's product lines:

	Standard Cost	Actual Cost
Standard: 4.0 metres at $5.40 per metre	$21.60
Actual: 4.4 metres at $5.05 per metre		$22.22
Direct Labour:
Standard: 1.6 hours at $6.75 per hour	$10.80
Actual: 1.4 hours at $7.30 per hour		$10.22
Variable Overhead:
Standard: 1.6 hours at $2.70 per hour	$4.32
Actual: 1.4 hours at $3.25 per hour	______	_$4.55
Total Cost per Unit	$36.72	$36.99

During this period, the company produced 4,800 units of this product. A comparison of standard and actual costs for the period on a total cost basis is given below:

Actual Costs: 4,800 units at $36.99	$177,552
Standard Costs: 4,800 units at $36.72	$176,256
Difference in Cost-Unfavourable	$1,296

There was no inventory of materials on hand at the beginning of the period. During the period, 21,120 metres of materials were purchased, all of which were used in production. Required: a) For direct materials, compute the price and quantity variances for the period

b) For direct labour, compute the rate and efficiency variances

c) For variable overhead, compute the spending and efficiency variances.