Reference no: EM132959746

Question - Dory Corporation produces gourmet tuna in a can. The static budget for June calls for a production level of 20,000 cases of tuna. Dory Corporation uses a standard cost system and applies overhead based on direct labor hours. The company has established the following standards for one case of tuna:

Direct materials (7.5 pounds @ $3.00 per pound) $22.50

Direct labor (.3 hours @ $14.00 per hour) $ 4.20

Variable overhead (.3 hours @ $6.00 per hour) $ 1.80

Fixed overhead (.3 hours @ $18 per hour) $ 5.40

Total standard cost per case of tuna $33.90

During June, the company purchased 162,000 pounds of material at a total cost of $479,520. All materials purchased were used in the production. There were no beginning or ending inventories. During June, 23,000 cases of tuna were manufactured using 6,750 direct labor hours. The total factory wages for June were $95,850 and the company incurred $43,500 in actual variable overhead costs and $110,000 in actual fixed overhead costs.

Required -

A. Calculate the material usage variance for June.

B. Give possible reasons for the material usage variance

C. Calculate the fixed overhead volume variance for June.