*Waterways Continuing Problem 12 At the end of June the manager of the B.C. manufacturing plant was provided with the following variance analysis report: Budget 324,000 Actual 341,000 Variance 17,000 Favourable (F)/ Unfavourable (U) F Production in units Production costs: Direct material Direct labour Variable overhead costs Fixed overhead costs Total production costs $1,010,880 $1,036,992 $(26,112) 1,458,000 1,500,095 (42,095) 194,400 204,335 (9,935) 162,000 156,945 5,055 $2,825,280 $2,898,367 $(73,087) F The manager immediately called the production supervisor, demanding an explanation for the large unfavourable variance for the quarter. The production supervisor was puzzled. He thought the cost-cutting measures they had incorporated were beginning to work. He certainly wasn't expecting such a large discrepancy. The standard rates the plant was using with its normal costing system are summarized below. Volume Cost Direct material 1.30 kg per unit $2.40 per kg Direct labour 0.25 hour per unit $18.00 per hour Predetermined overhead rate: Variable 0.25 hour per unit $2.40 per hour Fixed 0.25 hour per unit $2.00 per hour Other relevant information: 1. 2. A total of 451,000 kg of direct materials were purchased during the quarter at a cost of $2.45 per kilogram. A total of 432,080 kg of direct materials were used in production to manufacture 341,000 units. 3. Payroll recorded 84,275 direct labour hours at an average cost of $17.80 per hour. Calculate the following production variances. Material price variance Material quantity variance Labour price variance $ TON Labour efficiency variance Variable overhead variance