Catch a Wave Company manufactures surfboards. Its standard cost information follows:
Standard Standard Price Standard Unit
Quantity (Rate) Cost
Fiberglass 15 sq. ft. $5 per sq. ft. $75.00
Direct labor 10 hrs $15 per hour 150.00
Variable manufacturing overhead $6 per direct labor hour 60.00
Fixed manufacturing overhead $8 per direct labor hour 80.00
The company expected to require 2,500 hours of direct labor.
Catch a Wave has the following actual results for the month of June:
Number of units produced and sold 260
Number of square feet of fiberglass used 4,100
Cost of fiberglass purchased (5,000 square feet) $24,500
Number of labor hours worked 2,550
Direct labor cost $39,525
Variable overhead cost $14,790
Fixed overhead cost $20,500
a) Compute the eight variances that were discussed in class.
b) Explain what these variances may be indicating.