Seat Corp. makes plastic folding chairs. The following information is available regarding the standard cost of making a chair:
o It should cost $4 per kilogram to purchase the plastic used to make chairs.
o It should take 0.25 labor hours to make a chair.
o Overhead is allocated using direct labor hours as the allocation base.
o Total standard cost of a chair is $13.
The following information is available regarding actual results for the past month:
o Actual production and sales were 24,000 chairs.
o Actual material used was 37,500 kilograms and actual material cost for the month was $157,500.
o Material price variance was 7,500 unfavorable.
o Material efficiency variance was 6,000 unfavorable.
o Direct labor price variance was 4,560 unfavorable.
o Actual direct labor hours worked was 5,700 and actual labor cost for the month was $95,760.
o They under-applied their overhead by $3,000.
Required:
a) Calculate the material and labor variances for the month,
b) Assume all overhead is fixed. What are the actual and applied overhead amounts?