Straightforward variance analysis Arrow Enterprises uses a standard costing system. The standard cost sheet for product No. 549 follows:

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 $ 26.00

Direct labor: 8 hours @ $8.50 68.00

Variable factory overhead: 8 hours @ $7.00 56.00

Fixed factory overhead: 8 hours @ $2.50 20.00

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 6,800 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.