Problem

Betterton Corporation manufactures automobile headlight lenses and uses a standard cost...

Betterton Corporation manufactures automobile headlight lenses and uses a standard cost system. At the beginning of the year, the following standards were established per 100 lenses (a single batch).

Required:

a. Calculate the following variances:

(1) Overhead spending variance

(2) Volume variance

(3) Over/underabsorbed overhead

(4) Direct materials price variance at purchase

(5) Direct labor efficiency variance

(6) Direct materials quantity variance

b. Discuss how the direct materials price variance computed at purchase differs from the direct materials price variance computed at use. What are the advantages and disadvantages of each?

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Solutions For Problems in Chapter 13