The accountants at Value Vases developed the following standards for producing exquisite vases from a liquid silicate:

Direct materials 2.5 gallons @ $5 per gallon

Direct labor 3.5 hours @ $15 per hour

Variable overhead $10.00 per direct labor hour

Fixed overhead $5.00 per direct labor hour

Value’s volume of direct labor hours for normal costing is 1,680 each month. In a recent month, Value produced 500 vases and incurred the following costs:

Direct materials purchased & used 1,200 gallons @ $6 per gallon

Direct labor 1,700 hours @ $14 per hour

Variable overhead $15,000

Fixed overhead $8,500

a. Calculate the following eight variances.

i. Direct material price variance

ii. Direct material efficiency variance

iii. Direct labor price variance

iv. Direct labor efficiency variance

v. Variable overhead spending variance

vi. Variable overhead efficiency variance

vii. Fixed overhead spending variance

viii. Fixed overhead production volume variance

b. Suggest one possible cause for each of the following variances calculated in part (a):

i. Direct material price variance

ii. Direct labor efficiency variance

iii. Fixed overhead spending variance

Answer rating: 100% (QA)

a Direct material price variance 1200 56 1200 U Direct material efficiency variance 5 1250 12... View the full answer