Problem:
The controller of a company which manufactures home-permanent kits has just received the following final production reports and cost figures for the month of May:
Standard Costs:
DM: 4 ounces @ $.50/ounce------------------------------- $2.00
DL: 1/10 of an hour @ $7.50/hour-------------------------- .75
VOH: 1/10 * $15 (applied on the basis of DLHS) ------- 1.50
FOH * ---------------------------------------------------------1.00
Based on normal activity of 120,000 DLHS and $1,200,000 of estimated FOH costs for the year.
Actual Production Costs for 90,000 units:
DM: $190,350 (405,000 ounces used)
DL: $71,500 (10,000 hours used)
VOH: $160,000
FOH: $150,000
Compute: DM, DL, Variable OH, and Fixed OH variances for the month of May.