in the current year, JavaWare Company produced 85,000 and sold 75,000 Coffee Makers at a selling price of $40.00 each. All manufacturing overhead is allocated on the basis of machine hours. The standard variable costs per Coffee Maker were:

Direct Materials: 4 kg x $2.00 per kg

Direct Labour: 0.5 hours x $18.00 per hour

Variable Overhead: 1.5 Machine Hours x $4.00 per machine hour

Information regarding fixed overhead includes the following:

Budgeted Fixed Overhead: $600,000

Denominator Used: Total Budgeted Machine Hours

Budgeted Production Volume: 80,000 units

Standard Machine hours/Unit: 1.5 Machine Hours

Data on Actual Costs and Quantities:

DM Purchases: 400,000 kg x $1.90 per kg

DM Used: 350,000 kg

DL Incurred: 41,500 hours

Actual Average Wage: $18.50 per hour

Actual Machine Hours: 130,000 hours

Variable Overhead Costs: $490,000

Fixed Overhead Costs: $580,000

All inventory accounts had zero beginning balances. All of the work started this period was completed in the period.

REQUIRED:

1. Calculate the budgeted allocation rate for Fixed Manufacturing Overhead.
2. Calculate these variances: Direct Material Price and Efficiency, Direct Labour Price (Rate) and Efficiency, Variable Overhead Spending and Efficiency, and Fixed Overhead Spending and Production Volume Variances. JavaWare Company isolates direct material price variances at the time materials are purchased.
3. Give a one-sentence interpretation (or explanation) for each of the eight variances listed in requirement #2.