Soriano Manufacturing Company uses a standard cost accounting system to account for the manufacturing of exhaust fans. In July 2020, it accumulates the following data for 1,500 units started and finished:

Cost and Production Data	Actual	Standard
Raw materials
Units purchased	21,000
Units used	21,000	22,000
Unit cost	$3.40	$3.00
Direct labour
Hours worked	3,450	3,600
Hourly rate	$11.80	$12.50
Manufacturing overhead
Incurred	$101,500
Applied		$108,000

Manufacturing overhead was applied based on direct labour hours. Normal capacity for the month was 3,400 direct labour hours. At normal capacity, budgeted overhead costs were $20 per labour hour variable and $10.00 per labour hour fixed. Total budgeted fixed overhead costs were $34,000.

Jobs finished during the month were sold for $280,000. Selling and administrative expenses were $25,000.

Instructions

a.

Calculate all of the variances for direct materials and direct labour.

LQV = $1,875 F

b.

Calculate the total manufacturing overhead variance.

OHV = $6,500 F

c.

Calculate the overhead budget variance and the overhead volume variance.

d.

Prepare an income statement for management showing the variances. Ignore income taxes.

Please explain it well