Problem 10A-10 Comprehensive Standard Cost Variances [LO10-1, LO10-2, LO10-3, LO10-4] "Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well," said Kim Clark, president of Martell Company. "Our $17,350 overall manufacturing cost variance is only 2% of the $1,536,000 standard cost of products made during the year. That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year." The company produces and sells a single product. The standard cost card for the product follows: Standard Cost Card per Unit Direct materials, 4.50 feet at $2.60 per foot 11.70 Direct labor, 2.9 direct labor-hours at $9 per direct labor-hour 26.10 Variable overhead, 2.9 direct labor-hours at $2.20 per direct labor-hour 6.38 Fixed overhead, 2.9 direct labor-hours at $4.50 per direct labor-hour 13.05 57.23 Standard cost per unit The following additional information is available for the year just completed a. The company manufactured 25,000 units of product during the year. b. A total of 110,000 feet of material was purchased during the year at a cost of $2.75 per foot. All of this material was used to manufacture the 25,000 units. There were no beginning or ending inventories for the year c. The company worked 75,000 direct labor-hours during the year at a direct labor cost of$8.70 per hour. d. Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow: Denominator activity level (direct labor-hours) 70,000 Budgeted fixed overhead costs 15,000 Actual variable overhead costs incurred 180,000 Actual fixed overhead costs in 313,100