This is a standard costing question. Haytham Kenway opened a company for Templar use and his company uses a standard cost system for controlling the making of the product costs.

a)Compute direct materials price variance and direct materials quantity variance. explain what is occurring (what is favourable and what is unfavourable)

b)compute direct Labour rate variance and direct Labour efficiency variance; what is favourable and what is unfavourable

c)compute variable overhead spending variance and variable overhead efficiency variance

d)compute fixed overhead budget variance and fixed overhead sales volume variance. Haytham says the volume that is normal is 15,000 units.

For the year 1751, he Infiltrated the British forts to collect data he could use for his company:

	Actual, K =1000, kg = kilogram	Standard/Budget, K = 1000, kg = kilogram
Production	30K units
Direct Materials	Quantity = 120K kg Cost = $200K	Quantity = 6 kg/unit of output Cost = $2/kg
Direct Labour	Hours = 11K hours Cost = $300K	Hours = 2 hours/unit of output Cost = $6/hour
Overhead expenses	$300K (40% fixed)	$150K (20% fixed)

Haytham says direct Labour hours is the driver for variable overhead and the application rate he wants to use is $4 / direct Labour hour.