Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 300 cases off the production line before the end of the month. But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficiency and reduce costs. Yet the report, shown below, showed a different story.

Lexi picked up the phone and called Irvin. "Irvin, I don't get it.. beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating carts. Can you help me wader-Wand what's going on?" "Let me look into it and Ill get back to you," Irvin replied.

Irvin gathered the following additional information about the month's performance.

• Direct materials purchased: 55,000 pounds at a total of $632,500
• Direct materials used: 51,200 pounds
• Direct labor hours worked: 26,500 at a total cost of $290,310
• Machine hours used: 52,200

Irvin also found the standard cost card for a case of product.

Required

a. Calculate the direct materials price variance for the month.

b. Calculate the direct materials quantity variance for the month.

c. Calculate the direct labor rate variance for the month.

d. Calculate the direct labor efficiency variance for the month.

e. Calculate the variable overhead spending variance for the month.

f. Calculate the variable overhead efficiency variance for the month.

g. Calculate the fixed overhead spending variance for the month.

h. Prepare a performance report that will it Lesi in evaluating her efforts to control production costs.

i. Based on your review of the performance report you prepared, do you think Led did a good job of controlling production expenses during the 0011th? Why or why not?

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Actual Budget Variance Cases produced and sold 10,300 10,000 300 F Sales revenue $2,080,600 $2,000,000 $80,600 F Less variable expenses Direct material 593,160 575,000 18,160 U Direct labor 290,310 280,000 10,310 U Variable manufacturing overhead Variable selling expenses Variable administrative expenses 6,450 U 2,340 U 231,450 225,000 112,340 110,000 43,285 42,000 1,285 U Total variable expenses 1,270,545 1,232,000 38,545 U Contribution margin 810,055 768,000 42,055 F Less fixed expenses Fixed manufacturing overhead Fixed selling expenses Fixed administrative expenses 122,000 125,000 3,000 F 86,280 85,000 1,280 U 149,000 148,000 1,000 U Total fixed expenses 357,280 358,000 (720) F Operating income $ 452,775 $ 410,000 $42,775 F