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Posted: June 14th, 2023

Accelerator, Inc. manufactures a fuel additive, Stomp

P8-3 Accelerator, Inc. manufactures a fuel additive, Stomp, that has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month.In connection with your examination of Accelerator’s financial statements for the year ended September 30, management has asked you to review some computations made by Accelerator’scost accountant. Your working papers disclose the following about the company’s operations:Standard costs per drum of product manufactured:Materials:8 gallons of chemicals@$2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $161 empty drum @ $1/drum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 $17Direct labor: 1 hour @ $8/hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8Factory Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6Costs and expenses during September:Stomp: 600,000 gallons purchased at a cost of $1,140,000; 645,000 gallons used.Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used.Direct labor: 81,000 hours worked at a cost of $654,480.Factory overhead: $768,000.Required:Calculate the following variances for September1. Materials quantity variance.2. Materials purchase price variance.3. Labor efficiency variance.4. Labor rate variance.

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