Reference no: EM131881233

Problem - Straightforward variance analysis

Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.

Direct materials: 4 units @ $6.50 $26.00

Direct labor: 8 hours @ $8.50 68

Variable factory overhead: 8 hours @ $7.00 56

Fixed factory overhead: 8 hours @ 2.5 20

Total standard cost per unit $170.00

The following information pertains to activity for December:

• Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.
• Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.
• Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.
• Actual production amounted to 6,500 completed units.

Instructions:

Compute Arrow's direct material variances.

Compute Arrow's direct labor variances.

Compute Arrow's variances for factory overhead.