In all problems involving variances, use “F” and “U” to indicate favorable and unfavorab...

In all problems involving variances, use “F” and “U” to indicate favorable and unfavorable variances, respectively.

Materials, labor, and overhead variances—two-variance method

McDormand Co. manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Fixed overhead is $60,000 per period. The standard costs per batch follow:

During the period, 503 batches were manufactured, and the following costs were incurred:

Materials used (40,743 gallons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,482.34

Labor (29,677 hours at $8.65 per hour) . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,706.05

Actual variable overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,080.00

Actual fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,500.00

Required:

Calculate the variances for materials, labor, and overhead. For overhead, use the two-variance method.