Standard Cost Variances Part I Clair Rogers, vice-president of XYZ Company, was pleased to see a small variance on the income statement after the trouble the company had been having in controlling manufacturing costs. She noted that the $17,016 overall manufacturing variance reported last period was well below the 3% limit that had been set for variances. The company produces and sells a single product. The standard cost card for the product follows: Standard Cost Card-Per Unit Direct materials, 4 metres at $2.60 per metre 10.40 Direct labour, 1.6 direct labour-hours at $10.0 per direct labour-hour 16.00 Variable overhead, 1.6 direct labour-hours at $2.7 per direct labour-hour 4.32 Fixed overhead, 1.6 direct labour-hours at $5 per direct labour-hour 8.00 Standard cost per unit 38.72 The following additional information is available for the year just completed: a. The company manufactured 21,000 units of product during the year. b. A total of 83,020 metres of material was purchased during the year at a cost of $2.80 per metre. All of this material was used to manufacture the 21,000 units. There were no beginning or ending inventories for the year. c. The company worked 34,700 direct labour-hours during the year at a cost of $9.80 per hour. d. Overhead cost is applied to products on the basis of standard direct labour-hours. Data relating to manufacturing overhead costs follow: Denominator activity level (direct labour-hours) 32, 800 Budgeted fixed overhead costs (from the flexible budget) 164,000 Actual fixed overhead costs 162,350 Actual variable overhead costs 95,270 Required: 1. Compute the direct materials price and quantity variances for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Materials price variance Materials quantity variance2. Compute the direct labour rate and efficiency variances for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labour rate variance Labour efficiency variance 3. For manufacturing overhead, compute the following: a. The variable overhead spending and efficiency variances for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variable overhead spending variance Variable overhead efficiency variance 4. (WILL BE ANSWERED IN QUESTION Standard Cost Variances Part II) Based on the analysis you completed in Q1, Q2 and Q3 do you think that everyone should be congratulated for a job well done? Explain. Which areas are a concern, who is responsible and what next steps would you recommend for the company