Chapter 8, Problem 8.44P

Review of Chapters 7 and 8, 3-variance analysis. (CPA, adapted) The Beal Manufacturing Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DLH). At the beginning of 2017, Beal adopted the following standards for its manufacturing costs:

	Input	Cost per Output Unit
Direct materials	5 lb. at $4 per lb.	$ 20.00
Direct manufacturing labor	4 hrs. at $16 per hr.	64.00
Manufacturing overhead:
Variable	$8 per DLH	32.00
Fixed	$9 per DLH	36.00
Standard manufacturing cost per output unit		$152.00

The denominator level for total manufacturing overhead per month in 2017 is 37,000 direct manufacturing labor-hours. Beal’s budget for January 2017 was based on this denominator level. The records for January indicated the following:

Direct materials purchased	40,300 lb. at $3.80 per lb.
Direct materials used	37,300 lb.
Direct manufacturing labor	31,400 hrs. at $16.25 per hr.
Total actual manufacturing overhead (variable and fixed)	$650,000
Actual production	7,600 output units

1. A. Prepare a schedule of total standard manufacturing costs for the 7,600 output units in January 2017.

  Required

1. B. For the month of January 2017, compute the following variances, indicating whether each is favorable (F) or unfavorable (U):
   1. a. Direct materials price variance, based on purchases
   2. b. Direct materials efficiency variance
   3. c. Direct manufacturing labor price variance
   4. d. Direct manufacturing labor efficiency variance
   5. e. Total manufacturing overhead spending variance
   6. f. Variable manufacturing overhead efficiency variance
   7. g. Production-volume variance