Betterton Corporation manufactures automobile headlight lenses and uses a standard cost system. At the beginning of the year, the following standards were established per 100 lenses (a single batch).

Expected volume per month is 5,000 direct labor hours for January, and 105,000 headlight lenses were produced. There were no beginning inventories. The following costs were incurred in January:

Required:
a. Calculate the following variances: (1) Overhead spending variance. (2) Volume variance. (3) Over underabsorbed overhead. (4) Direct materials price variance at purchase. (5) Direct labor efficiency variance. (6) Direct materials quantity variance.
b. Discuss how the direct materials price variance computed at purchase differs from the direct materials price variance computed at use. What are the advantages and disadvantages ofeach?

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Input Amount Direct materials Direct labor Factory overhead: 100 pounds $2.00 pound 5 hours @ S18hour $200 90 Fixed overhead Variable overhead $4 per direct labor hour $6 per direct labor hour 20 30 $340 Total cost per batch of 100 headlight lenses Total factory overhead incurred (ixed Variable) Direct labor Direct materials used Direct materials purchased 110,000 pounds s 59.000 99,900 $209.000 5,400 hours 102.000 pounds