Problem 2: 18 points. At the beginning of the year, Craig Company had the following standard cost sheet for one of its plastic product. Craig planned to produce 850 units for the year. Direct materials (8 pounds at $3.00) S24.00 Direct labor (3 hours at $20) 60.00 Standard prime cost per unit S84.00 Craig uses a standard costing system. During the year, a variable overhead rate of $5.70 per direct labor hour was used. Actual results: Actual number of units produced: 870 Materials purchased: 7,000 pounds at $2.85 per pound Materials used in production: 6800 pounds Direct labor: 2720 hours at $17.50 Actual variable overhead: $15.900 Compute the following variances. Remember to label your answers with an F or U 1. VOH efficiency variance 2. Labor rate variance 3. Labor efficiency variance 4. Materials price variance 5. Materials usage variance 6. VOH spending variance A/ Calculator For discount factors use Exhibit 128.1 and Exhibit 120.2. Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment $120,000 1 $320,000 2 280,000 120,000 3 240,000 320,000 160,000 400,000 5 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar, 1. Assuming a discount rate of 14%, compute the net present value of each piece of equipment. Puro equipment Briggs equipment 2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5-year life. What must the annual cash flow be for this equipment to be selected over the other two? Assume a 14% discount rate per year Check My Work