6-32 Comprehensive variance calculations (CMA Adapted) (LO 2, 3, 4, 5, 6, XLS 7, 8) Stratton, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows. Standard Price Standard Quantity Standard Cost Direct materials $ 4 per yard 1.5 yards $ 6.00 Direct labor $12 per DLH 0.5 DLH 6.00 Variable overhead $ 4 per DLH 0.5 DLH 2.00 Fixed overhead $ 6 per DLH 0.5 DLH 3.00 $17.00 Sandy Robison, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Sandy asked CFO Suzy Summers for more information. She provided the following overhead budgets, along with the actual results for November. The company purchased and used 80,200 yards of fabric during the month. Fabric purchases during the month were made at $3.90 per yard. The direct labor payroll ran $319,725, with an actual hourly rate of $12.25 per direct labor hour. The annual budgets were based on the produc- tion of 50,000 shirts, using 250,000 direct labor hours. Though the budget for November was based on 50,000 shirts, the company actually produced 52,000 shirts during the month. Variable Overhead Budget Annual Budget Per Shirt November-Actual Indirect material $ 450,000 $0.90 $ 49,200 Indirect labor 300,000 0.60 31,400 Equipment repair 200.000 0.40 20,500 Equipment power 50,000 0.10 6,900 Total $1,000,000 $2.00 $108,000 Fixed Overhead Budget Annual Budget November-Actual Supervisory salaries $ 260,000 $ 22,000 Insurance 350,000 27,500 Property taxes 80,000 6,500 Depreciation 320,000 26,000 Utilities 210,000 20,300 Quality inspection 280,000 25,000 Total $1,500,000 $127,300 Required a. Calculate the direct materials price and quantity variances for November. b. Calculate the direct labor rate and efficiency variances for November c. Calculate the variable overhead spending and efficiency variances for November d. Calculate the fixed overhead spending variance for November e. Provide an explanation for each variance you calculated. f. Which of these variances should Sandy be held responsible for? Why