Problem:
The Plastics Remolding Company manufactures containers. A strategically located plant involved in this type of manufacturing was acquired. To help ensure cost efficiency, the company adopted a standard costing system using the following variable inputs: Standard quantityStandard priceStandard cost Direct materials12 lbs.$4.00$48.00 Direct labor1.7 hours 12.0020.00 Variable overhead1.7 hours 3.50 6.00 Total$74.00 Fixed manufacturing overhead was allocated on direct labor hours and budgeted at the practical manufacturing capacity of 8,000 units. The per fixed costs were therefore budgeted at $54,400. During the first week of January, the company had the following actual results: Units produced7,000 units Actual labor costs $154,700 Actual labor hours11,900 Materials purchased and used69,000 @ $3.75 per lb. Actual variable overhead costs$39,750 Actual fixed overhead costs$ 53,000 Required: Prepare (a) the materials price and efficiency variances (b) the labor rate and efficiency variances (c) the variable overhead spending and efficiency variances (d) the fixed overhead spending and production volume variances.