Three Variance Analysis

Beal Manufacturing Company's consisting system has two cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard DMLH. At the beginning of 2022, Beal adopted the following standards for its manufacturing costs.

Cost per

Input Output Unit

Direct materials 3kg @$5/kg $15

Direct manufacturing labour 5 hrs @$15/hr $75

Manufacturing overhead:

Variable $6/DMLH $30

Fixed $8/DMLH $40

Standard manufacturing cost per output unit $160

The denominator level for total manufacturing overhead per month in 2022 is 40,000 DMLH. Beal's flexible budget for January 2022 was based on this denominator level. The records for January indicate the following:

Direct materials purchased 25,000kg @$5.20/kg

Direct materials used 23,100kg

Direct manufacturing labour 40,100 hrs @$14.60/hr

Total actual manufacturing overhead (Variable & fixed) $600,000

Actual production 7,800 output units

Required:

1. Prepare a schedule of total standard manufacturing costs for the 7,800 out put units in January 2022.
2. For January 2022, calculate the following variances, indicating whether each is favourable (F) or Unfavourable (U):
3. Direct materials rate variance, based on purchases.
4. Direct materials efficiency variance
5. Direct manufacturing labour rate variance
6. Direct manufacturing labour efficiency variance
7. Total manufacturing overhead rate variance
8. VMOH efficiency variance
9. Production-volume variance