The following information is for the third quarter of this year:

Planned Actual

Production 80,000 units 81,000 units

Direct Material Purchases 225,000 lbs. @ $ 3.00 225,000 lbs. @ $ 2.90

Direct Material Used 200,000 lbs. @ $ 3.00 200,500 lbs. @ $ 2.90

Direct labor 160,000 hrs. @ $ 10.00 140,000 hrs. @ $ 12.00

Variable manufacturing overhead $ 200,000 $ 202,000

Fixed manufacturing overhead $ 721,000 $ 723,500

Standard direct material pounds per unit 2.5

Standard direct labor hour per unit 2.0

Variable Overhead Rate per direct labor hour $

Required: Calculate the following three overhead variances; overhead is allocated based on direct labor hours.

1. Material Purchase Variance
2. Material Quantity Variance
3. Direct Labor Rate Variance
4. Direct Labor Quantity Variance
5. Overhead volume variance
6. Overhead efficiency variance
7. Overhead spending variance
8. Formulate a hypothesis about the cause of these variances