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    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.

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    Solution Summary

    The expert calculates Direct Material, Direct Labor, Variable Overhead, and Fixed Overhead variances.