Varsity international uses standard costing and flexible budgeting for planning and control purposes. Variable manufacturing overhead and fixed manufactur in overhead are both allocated using direct labour-hours. The company has budgeted 15,000 direct labour hours and $375,000 direct labour cost for May. In addition, total budgeted manufacturing overhead is $870,000 with $450,000 being for fixed manufacturing overhead and the remaining amount being for variable manufacturing overhead. During May, the company incurred direct labour costs of $480,000, variable manufacturing overhead costs of $400,000 and fixed manufacturing overhead costs of $525,000. The following variances were recorded for May:

Direct Materials Price Variance

$210,000 Favourable

Direct Materials Quantity Variance

75,000 Favourable

Total Variable Manufacturing Overhead Variance

84,000 Favourable

Variable Manufacturing Overhead Efifiency Variance

56000 favourable

Fixed Manufacturing Overhead Budget Variance

75000 Unfavourable

The standard cost per kg of direct material is $12.00. The standard amount is 4.5 kg of direct material for each unit of product. A total of 12,000 units were produced during May and there was no beginning inventory of direct materials nor was there any beginning or ending work in progress. In May, the direct materials price variance was $4 per kg. Unfortunately, in May some workers left the company. Their replacements had to be hired at higher rates, which had to be extended to all workers. AS a result, the actual wage rate in May exceeded the standard wage rate by $5 per hour.

a) Calculate the total kilograms of direct materials purchased for May. Show all calculations.

b) Calcuate the number of kilograms of excess direct materials used for May. Show all caculations

c) Calcuate the variable manufacturing overhead spending variance for May. show all calculations.

d) calcuate the total number of actual direct labour hours used. show all calculations

e) calculate the total number of standard direct labour hours allowed for the units produced for May. show all calculations

F) calculate the fixed manufacturing overhead volume variance. Show all calculations

g) discuss the difference between flexible and static budgets and explain the advantages of using a flexible budget for control purposes when compared to using a static budget.