Singularity Inc. produces and sells a single product. Standard cost information for the product follows:

Per unit of product:

Direct materials, 4 meters at $4.00 per meter ........ $ 16.00

Direct labor, 1.5 hours at $10.00 per hour .........15.00

Variable overhead, 1.5 hours at $3.00 per hour....4.50

Fixed overhead, 1.5 hours at $7.00 per hour ......10.50

Standard cost per unit ..........................$46.00

The company manufactured and sold 18,000 units of product during the year. A total of 70,200 meters of material was purchased during the year at cost of $4.20 per meter. All of this material was used to manufacture the 18,000 units. The company records showed no beginning or ending inventories for the year.

The company worked 29,250 direct labor-hours during the year at a cost of $9.75 per hour.

REQUIRED:

Part One

A.Compute the direct materials purchase price variance for the year. (4 marks)

B.Compute the direct material rate quantity variance for the year. (4 marks)

C.Compute the direct labor rate variance for the year. (4 marks)

D.Compute the direct labor efficiency variance for the year. (4 marks)

Part Two (Independent of Part A)

The following variances were reported:

Material purchase price varianceUnfavorable

Material quantity varianceFavorable

Labor rate varianceNegligible

Labor efficiency varianceFavorable

Machine hours efficiency Favorable

The sum of the favorable variances above exceeded the unfavorable materials price

variance by a considerable amount. The quality of the output from the department was the

same as usual. Is there any connection between these variances? If so, explain.

(6 marks)