The Koh Company has had great difficulty controlling costs in Singapore during the past 3 years. Last month, the company installed a standard-cost and flexible-budget system. A condensation of results for a department follows:

The department had initially planned to manufacture 9,000 audio speaker assemblies in 6,000 standard direct-labor hours allowed. Material shortages and a heat wave resulted in the production of 8,100 units in 5,800 actual direct-labor hours. The standard wage rate is $5.25 per hour, which was $.15 higher than the actual average hourly rate.

1. Prepare a detailed performance report with two major sections: direct labor and variable overhead.

2. Prepare a summary analysis of price and quantity variances for direct labor and spending and efficiency variances for variable overhead.

3. Explain the similarities and differences between the direct-labor and variable-overhead variances. What are some of the likely causes of the overhead variances?

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Expected Cost per Standard Direct-Labor Hour Flexible-Budget Variance $.60 Lubricants Other supplies Rework Other indirect labor Total variable overhead $330 F 225 U 450 U 450 U $795 U .30 60 1.50 $3.00 FFavorable. UUnfavorahle