Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well, said Kim Clark, president of Martell Company. Our $18,300 overall manufacturing cost variance is only 1.2% of the $1,536,000 standard cost of products made during the year. Thats well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year.

The company produces and sells a single product. The standard cost card for the product follows:

Standard Cost Cardper Unit
Direct materials, 2 feet at $8.45 per foot	$	16.90
Direct labor, 1.4 direct labor-hours at $16 per direct labor-hour		22.40
Variable overhead, 1.4 direct labor-hours at $2.50 per direct labor-hour		3.50
Fixed overhead, 1.4 direct labor-hours at $6 per direct labor-hour		8.40
Standard cost per unit	$	51.20

The following additional information is available for the year just completed:

a.	The company manufactured 30,000 units of product during the year.

b.	A total of 64,000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units. There were no beginning or ending inventories for the year.

c.	The company worked 43,500 direct labor-hours during the year at a direct labor cost of $15.80 per hour.

d.	Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow:

Denominator activity level (direct labor-hours)		35,000
Budgeted fixed overhead costs	$	210,000
Actual variable overhead costs incurred	$	108,000
Actual fixed overhead costs incurred	$	211,800

3.	For manufacturing overhead compute:

a.	The variable overhead rate and efficiency variances for the year.(Round Standard Rate and Actual Rate to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).