Part 3 Cost variance analysis Gourmet, Inc. produces containers of frozen food. During October the company had the following actual production and costs. Actual Containers produced in October 725 Variable Overhead $5,500 Fixed Overhead $14,000 Direct Labor cost $75,600 Which is 4,000 Direct labor hours Actual material purchased $33,000 Which is 15,000 pounds Actual Material pounds used 14,900 pounds Overhead is budgeted and applied using direct-labor hours. Standard cost and annual budget information are as follows: Standard cost per container Direct Labor 5 hours at $18 $90 Direct Material 20 pounds at $2 $40 Variable overhead 5 Direct labor hours at $1.50 $7.50 Fixed Overhead 5 Direct labor hours at $3 $15 Total $152.50 Budgeted Monthly Fixed Overhead $12,500 Required: Make sure you do not forget to label the variances U or F. You need to show your work either by cell reference or showing your calculation to the side. 1. Calculate the direct materials price and quantity variance. Materials price variance - This variance is calculated at time of purchase Materials Quantity variance 2. Calculate the direct labor rate and efficiency variances. Labor rate variance Labor Efficiency variance 3. Calculate the variable overhead spending and efficiency variances. Variable overhead spending variance Variable overhead efficiency variance 4. Calculate the fixed overhead budget variance. Fixed overhead budget variance 5. Pick out the two variances that you computed above that you think should be further investigated. Explain why you picked these 2 variances and what might be the possible cause of the variances.