Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.

Direct materials: 4 units @ $6.50……………………………………..$26.00

Direct labor: 8 hours @ $8.50……………………………………………..68

Variable factory overhead: 8 hours @ $7.00………………………………56

Fixed factory overhead: 8 hours @ 2.5…………………………………….20

Total standard cost per unit…………………………………………..$170.00

The following information pertains to activity for December:

1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.

2. Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.

3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.

4. Actual production amounted to 6,500 completed units.

Instructions:

a. Compute Arrow's direct material variances.

b. Compute Arrow's direct labor variances.

c. Compute Arrow's variances for factory overhead.

Answer rating: 100% (QA)

a Arrow DM price Variance 2635 Fav DM Qty variance 2275 unfav Total DM variance 360 Fav ... View the full answer