1. The following information is from Megaplex static budget for 2018:

Expected production and sales : 14,000 units

Expected selling price per unit : $ 1,600

Expected variable manufacturing overhead costs : $3,500,000 ($50/direct

manufacturing labour hour,

70,000 hours)

Expexted total fixed manufacturing costs : $4,000,000

Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor:

	Standard Quantity	Standard Price	Standard Unit Cost
Direct materials	30 kgs	$25 per kg	$750
Direct manufacturing labor	5 hours	$40 per hour	$200

During 2018, actual number of units produced and sold was 13,000, at an average selling price of $1,550. Actual cost of direct materials used was $11,687,000, based on 377,000 kgs purchased at $31 per kg. Direct manufacturing labor-hours actually used were 58,500, at the rate of $38 per hour. As a result, actual direct manufacturing labor costs were $2,223,000. Actual variable overhead costs were $3,042,000 and actual fixed costs were $4,100,000. There were no beginning or ending inventories.

1. Calculate the sales-volume variance and flexible-budget variance for operating income. (15 points)

	Actual Result	Flexible-Budget Variances		Flexible Budget
Units Sold
Revenues
Variable Costs:
Direct Materials Costs
Direct Labor Costs
Variable Manufacturing O/H
Total Variable Costs
Contribution Margin
Fixed Manufacturing O/H
Operating Income

2. Compute price and efficiency variances for direct materials and direct manufacturing labour. (10 points)

Direct Materials Price Variance
Direct Materials Efficiency Variance
Direct Labour Price Variance
Direct Labour Efficiency Variance

3. Compute spending and efficiency variances for variable manufacturing overhead. (5 points)

Actual Variable Overhead Allocation Rate = =

Direct Materials Spending Variance
Direct Materials Efficiency Variance

4. Compute spending and production volume variances for fixed manufacturing overhead. (10 points)

Spending Variance for Fixed Manufacturing Overhead =

Fixed Manufacturing Overhead Allocation Rate =

Allocated Fixed Manufacturing Overhad =

Production Volume Variance =