Thornton Manufacturing Company produces a component part of a top secret military communication device. Standard production and cost data for the part, Product X, follow:

Planned production		23,000	units
Per unit direct materials		3.00	pounds	@	$	1.60	per pound
Per unit direct labor		2.40	hours	@	$	7.60	per hour
Total estimated fixed overhead costs	$	533,600

Thornton purchased and used 73,300 pounds of material at an average cost of $1.64 per pound. Labor usage amounted to 53,910 hours at an average of $7.70 per hour. Actual production amounted to 23,900 units. Actual fixed overhead costs amounted to $570,600. The company completed and sold all inventory for $1,960,000.

Required

1. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity.

2. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).

3. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.

4. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).

5. Calculate the predetermined overhead rate, assuming that Thornton uses the number of units as the allocation base.

6. Calculate the fixed cost spending and volume variances and indicate whether they are favorable (F) or unfavorable (U).

7. Determine the amount of gross margin Thornton would report on the year-end income statement.