This compnay uses a standard cost system. There is no beginning or ending work in process, and finished goods inventory balances. You are asked to determine if the company is managing their costs effectively. The following information was provided concerning the one product produced by this company for the period that just ended: This company used Direct labor hours as the cost driver for the application of overhead. Actual price per kilogram $2.94 Actual kilograms of material used 31,500 Actual kilograms of material purchased 32,000 Actual hourly labor rate $17.49 Actual hours of production 4,900 labor hrs. Standard price per kilogram $2.96 Standard kilograms per completed unit 6 Standard hourly labor rate $17.90 Standard time per completed unit 1 Hour Actual Variable factory overhead $17,395.00 Actual Fixed factory overhead $18,200.00 Standard fixed factory overhead rate $3.25 per labor hour Standard variable factory overhead rate $3.80 per labor hour Budgeted fixed overhead $18,300.00 Units completed during the period 4,950 A. Calculate the direct materials price and quantity variance. Direct-material purchase price variance should be based on material purchased, since you want to isolate the variance as soon as possible. Direct-material Quantity variance should be based on materials used, since this is monitoring the production efficiency. Direct-material purchase price variance Direct Material Quantity variance B. Calculate the direct labor rate and efficiency variances. Direct Labor rate variance Direct Labor Efficiency variance C. Variable manufacturing overhead spending and efficiency variances. Variable overhead spending variance Variable overhead efficiency variance D. Fixed manufacturing overhead budget and volume variances. Fixed Manufacturing overhead budget variance Fixed overhead volume variance E. Pick out the one most significant variance that you computed above and explain to me the possible causes of this variance and why you chose it. Make sure to include if these items are favorable or unfavorable

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