Charlie Beagle noted a small variance on the income statement of Daribund Inc. The company manufactured 17,000 units last year using a total of 75,000 kilograms of material purchased at a cost of $4.25 per kg. The material was used in full for the manufacturing process for the 17,000 units, and there were no beginning or ending inventories for the year. Manufacturing required 33,000 direct labour-hours (against a budget of 34,000 DLH) during the year at a cost of $12.00 per hour. Overhead cost is applied to products on the basis of standard direct labour hours.

Cost Data

Requirements:
1. Compute the direct materials price and quantity variances for the year.
2. Compute the direct labour rate and efficiency variances for the year.
3. For manufacturing overhead, compute the following:
a. The variable overhead spending and efficiency variances for the year
b. The fixed overhead budget and volume variances for the year
4. Compute the aggregate variance
5. Based on the variance analysis, what comments can you make on the stability of operations and the effectiveness of budgeting and operations?

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Standard Cost Card-Per Unit kilograms $4.00 Per kg Direct materials, at 12 $ 11 Per direct labour hour $ 3 Per direct labour hour $ 5 Per direct labour hour Direct labour, DLH at 22 Variable overhead, DLH at DLH at Fixed overhead 2 10 Standard cost per unit 50 Fixed OH DLH expected. 28,000 Budgeted fixed overhead costs $175,000 $152,000 Actual fixed overhead costs $ 79,200 Actual variable overhead costs