Reference no: EM132500617

You have started working as a cost accountant for a firm that has only been in business for one month. The firm is able to buy a new type of biodegradable plastic at a fixed price of $100 per roll. The plastic is then cut and sealed to make garbage bags. Fixed factory overhead is estimated to be $125,000 per month.

During this past month, 8,000 cartons of garbage bags were produced, which represents 80% of the activity volume. You are given the following information:

Rolls of plastic used40

Variable overhead incurred$61,000

Overhead efficiency variance$5,000

UStandard costs per carton of garbage bags:

Labour hours2Wage rate$8per hour

Total overhead$20

Rolls of plastic0.004rolls

Question: Calculate the following:

1. Actual number of direct labour hours incurred
2. Labour efficiency variance
3. Materials quantity variance
4. Fixed overhead budget variance
5. Fixed overhead volume variance