ABC Corp produces alphabet flash cards for grammar schools. They forecast that they will need to produce 90,000 sets of cards for the 2006-2007 school year. They budget they following costs for each set of cards.

Materials (1/2 pounds cardboard @ $1.5 per pound) | $.75 <- cost per set

Labor (1/4 hour @ $10 per hour) | $2.50 <- cost per set

Variable overheads (1/4 hour @ $5 per hour) | $1.25 <- cost per set

Fixed Overhead | $21,000 <- cost per set

Actual results for the academic year were:

Production | 80,000 sets of cards

Materials purchased and used | 38000 pounds @ 1.3 per pound

Actual Labor | 23,000 hours costing $245,000

Actual Variable Overhead| $130,000

Actual Fixed Overhead | $22,00

1. Prepare an analysis that shows the Volume Variance and Flex Variance using per unit costs and a static budget, a flexible budget and actual costs

2. Compute Material Price and Quantity Variances

3. Compute the Labor Rate and Efficiency Variance