Straightforward variance analysis

Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.

Direct materials: 4 units @ $6.50


Direct labor: 8 hours @ $8.50


Variable factory overhead: 8 hours @$7.00


Fixed factory overhead: 8 hours @2.5


Total standard cost per unit


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.

a. Compute Arrow’s direct material variances.

b. Compute Arrow’s direct labor variances.

c. Compute Arrow’s variances for factory overhead.