Standard Costs & Variance Analysis (Chapter 10) Assignment (25 Points) The ABC Company uses a standard cost system and sets its predetermined overhead rate based on direct labor hours. The following data are taken from the company's planning budget for the current year: - Standard DL Hours for planned production Variable Manufacturing Overhead Planned Fixed Manufacturing Overhead Planned The standard cost card for the product follows: Direct Material Direct Labor Manufacturing Overhead Total Standard Cost per unit 5,000 $25,000 $59,000 Standard Quantity Standard Standard Price or Rate Cost or Hours (1)x(2) 3 yards $4.40 per yd. $13.20 1 hour $12 per hour $12.00 $16.80 1 hour per hour $16.80 $42.00 During the year the company produced 6,000 units of product and incurred the following actual costs: - Material Purchased 24,000 yards at $4.80 $115,200 Materials used in production (in yards). Direct labor cost incurred, 5,800 hours @ $13 per hr. 18,500 $ 75,400 Variable manufacturing overhead cost incurred. Fixed manufacturing overhead cost incurred....... $ 29,580 $ 60,400 Required: 1. Create a new standard cost card that separates the variable manufacturing overhead per unit and the fixed manufacturing overhead per unit. 2. Compute the materials price and quantity variances. Also, compute the labor rate and efficiency variances. 3. Compute the variable overhead rate and efficiency variances. Also compute the fixed overhead budget and volume variance. 4. What effect, if any, does the choice of a denominator activity level have on unit standard costs? Is the volume variance a controllable variance from a spending point of view? Explain.