Part 3 (15 mins maximum): Practice Exam Problem David and Paul have a food processing company. One product is a gourmet frozen cheese pizza. Variable manufacturing overhead is based on direct-labor hours. The standard costs for a large pizza are: Standard Quantity Standard Cost Cheese ... 2.6 ounces $ 1.70 per ounce Tomato Sauce............ 3.5 ounces $ 0.356 per ounce Direct Labor...... 0.1 DLH $ 10.00 per DLH Variable Manufacturing Overhead 0.1 DLH $ 2.10 per DLH During August 150,000 pizzas were produced and the following activity was recorded: 1.420,000 ounces of CHEESE was purchased for $672,000. 2.370,000 ounces of CHEESE were used during the month. 3.420,000 ounces of TOMATO SAUCE were purchased during the month for $168,000. 4.280,000 ounces of TOMATO SAUCE was used during the month 5. 16,000 Direct Labor Hours were worked at a cost of $156,800. 6. Actual Manufacturing Overhead incurred was $24.000. Required: 1. Calculate materials price, quantity and total variance for the CHEESE. 2. Calculate the direct labor rate, efficiency and total variance. 3. Why might a favorable materials price variance cause an unfavorable labor efficiency variance