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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 108,000 liters at a budgeted price of $135 per liter this year. The standard direct cost sheet for one liter of the preservative follows.

Direct materials(2 pounds @ $8)$16Direct labor(0.5 hours @ $32)16

Variable overhead is applied based on direct labor hours. The variable overhead rate is $60 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $30 per unit. All non-manufacturing costs are fixed and are budgeted at $1.6 million for the coming year.

At the end of the year, the costs analyst reported that the sales activity variance for the year was $438,000 unfavorable.

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

Sales revenue$13,998Less variable costsDirect materials1,528Direct labor1,610Variable overhead2,930Total variable costs$6,068Contribution margin$7,930Less fixed costsFixed manufacturing overhead1,090Non-manufacturing costs1,270Total fixed costs$2,360Operating profit$5,570

During the year, the company purchased 184,000 pounds of material and employed 44,400 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.

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