Problem #6

(5 points)

Forto Chemical Corp. is a company that produces many products for janitors/ equipment and supplies. The company sells products to storekeepers as well as to customers. Extra Strength Toilet Bowl Cleaner is one of the products of Forto. It is a thick gel formula that cleans, deodorizes and descales without damaging the surface of the toilet. It is a cleaning product that is produced, packed in large boxes and then sold to customers and storekeepers.

Forto uses a traditional standard costing system to control costs and has established the following materials, labor and overhead standards to produce one box of Extra Strength Toilet Bowl Cleaner:

Direct Materials: 2.5 pounds @ $18 per pound	$27.00
Direct labor: 0.8 hours $14 per hour	$11.20
Variable manufacturing overhead: 0.9 hours @ $8.00	$7.20
	$45.40

During March 2017, company produced and sold 5,000 boxes of Extra Strength Toilet Bowl Cleaner. 8,000 pounds of direct materials were purchased @ $15.50 per pound. Out of these 8,000 pounds, 7,000 pounds were used during March. There was no inventory at the beginning of March. 1600 direct labor hours were recorded during the month at a cost of $40,000. The variable manufacturing overhead costs during March totaled $7,200.

Required: Compute:

Materials Price Variance

Materials Quantity Variance.

Direct Labor Rate Variance

Direct Labor Efficiency Variance.

Variable Overhead Spending Variance

Variable Overhead Efficiency Variance.

(Assume that the materials price variance is computed at the time of purchase.)