Solomon Manufacturing Company produces a component part of a top secret military communication device. Standard production and cost data for the part, Product X, follow:

Planned production23,000unitsPer unit direct m..s@$1.80per pound Per unit direct l..s@$7.20per hourTotal estimated fixed overhead costs$517,500

Solomon purchased and used 81,830 pounds of material at an average cost of $1.84 per pound. Labor usage amounted to43,680 hours at an average of $7.29 per hour. Actual production amounted to23,600 units. Actual fixed overhead costs amounted to $556,500. The company completed and sold all inventory for $1,910,000.

Required

1. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity.
2. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
3. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.
4. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
5. Calculate the predetermined overhead rate, assuming that Solomonuses the number of units as the allocation base.
6. Calculate the fixed cost spending and volume variances and indicate whether they are favorable (F) or unfavorable (U).
7. Determine the amount of gross margin Solomonwould report on the year-end income statement.