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Straightforward variance analysis (L.O. 5) 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:
1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.
2. Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.
3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.
4. Actual production amounted to 6,500 completed units. Instructions: a. Compute Arrow's direct material variances. b. Compute Arrow's direct labor variances.
c. Compute Arrow's variances for factory overhead.
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