the predetermined oh rates were developed using a practical capacity of 6 000 units 642411

Filano Corp. has the following standards for one unit of product:

Direct material: 80 pounds X $6	$480
Direct labor: 3 hours X $16 per hour	48
Variable overhead: 1.5 hours of machine time X $50 per hour	75
Fixed overhead: 1.5 hours of machine time X $30 per hour	45

The predetermined OH rates were developed using a practical capacity of 6,000 units per year. Production is assumed to occur evenly throughout the year.

During May 2010, the company produced 525 units. Actual data for May 2010 are as follows:

Direct material purchased: 45,000 pounds X $5.92 per pound

Direct material used: 43,020 pounds (all from May’s purchases)

Total labor cost: $24,955 for 1,550 hour

Variable overhead incurred: $43,750 for 800 hours of machine time

Fixed overhead incurred: $22,800 for 800 hours of machine time

Required:

a. Calculate the following:

1. Material price variance based on purchases

2. Material quantity variance

3. Labor rate variance

4. Labor efficiency variance

5. Variable overhead spending and efficiency variances

6. Fixed overhead spending and volume variances

7. Overhead variances using a three variance approach

8. Overhead variances using a two variance approach

9. Overhead variance using a one variance approach

b. Record the entries to recognize the variances.