PROBLEM 11-4. Comprehensive Variance Problem Bowser Products operates a small plant in New Mexico that produces dog food in batches of 1,000 pounds. The product sells for $3 per pound.

Standard costs for 2006 are:

Standard direct labor cost = $15 per hour.

Standard direct labor hours per batch = 8 hours.

Standard cost of material A = $0.20 per pound Standard pounds of material A per batch = 800 pounds Standard cost ofrnaterial B = $0.40 per pound Standard pounds of material B per batch = 200 pounds Fixed overhead cost per batch = $400 At the start of 2006, the company estimated monthly production and sales of 40 batches. The company estimated that all overhead costs were fixed and amounted to

$16,000 per month.

During the month of June, 2006 (typically a somewhat slow month) 30 batches were produced (not an unusual level of production for this month). The following costs were incurred:

Direct labor costs were $4,800 for 300 hours.

24,500 pounds of material A costing $4,655 were purchased and used.

5,900 pounds of material B costing $2,419 were purchased and used.

Fixed overhead of $15,500 was incurred Required

a. Calculate variances for material, labor, and overhead.

b. Prepare a summary of the variances. Does the unfavorable overhead volume variance suggest that overhead costs are out of control?