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Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 126,000 liters at a budgeted price of $270 per liter this year. The standard direct cost sheet for one liter of the preservative follows.

Direct materials	(2 pounds @ $17)	$	34
Direct labor	(0.5 hours @ $50)		25

Variable overhead is applied based on direct labor hours. The variable overhead rate is $150 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $75 per unit. All non-manufacturing costs are fixed and are budgeted at $2.5 million for the coming year.

At the end of the year, the costs analyst reported that the sales activity variance for the year was $816,000 unfavorable.

The following is the actual income statement (in thousands of dollars) for the year.

Sales revenue	$	32,718
Less variable costs
Direct materials		3,508
Direct labor		2,960
Variable overhead		8,530
Total variable costs	$	14,998
Contribution margin	$	17,720
Less fixed costs
Fixed manufacturing overhead		1,180
Non-manufacturing costs		1,360
Total fixed costs	$	2,540
Operating profit	$	15,180

During the year, the company purchased 202,000 pounds of material and employed 53,400 hours of direct labor. Required: a.Compute the direct material price and efficiency variances. b.Compute the direct labor price and efficiency variances. c.Compute the variable overhead price and efficiency variances.

CoursHeroTranscribedText: (For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) a. Direct materials: Price variance Efficiency variance b. Direct labor: Price variance Efficiency variance C. Variable overhead: Price variance Efficiency variance

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