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The accountants at Fracmaster developed the following standards for producing pump cases from oil feedstock: Direct materials 2.5 litres @ $5 per litre Direct labour
The accountants at Fracmaster developed the following standards for producing pump cases from oil feedstock: Direct materials 2.5 litres @ $5 per litre Direct labour 3.5 hours @ $15 per hour Variable overhead $10.00 per direct labour hour Fixed overhead $5.00 per direct labour hour Fracmaster volume of direct labour hours for normal costing is 1,680 each month. In a recent month, Fracmaster produced 500 pump cases and incurred the following costs: Direct materials purchased & used 1,200 litres @ $6 per litre Direct labour 1,700 hours @ $14 per hour Variable overhead $15,000 Fixed overhead $8,500 a) Calculate the following eight variances: Direct material price variance Direct material efficiency variance Direct labour price variance Direct labour efficiency variance Variable overhead spending variance Variable overhead efficiency variance Fixed overhead spending variance Fixed overhead production volume variance b) Suggest one possible cause for each of the following variances calculated in part (a): Direct material price variance Direct labour efficiency variance Fixed overhead spending variance
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