Question

Problem 23-1A Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $6 per pound Direct labor-2.00 hours at $12.20 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit $ 6.00 24.40 15.00 13.00 $58.40 The predetermined manufacturing overhead rate is $14 per direct labor hour ($28.00 -2.00). It was computed from a master manufacturing overhead budget based on normal production of 10,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $75,000 ($7.50 per hour) and total fixed overhead costs of $65,000 ($6.50 per hour). Actual costs for October in producing 3,400 units were as follows. Direct materials (3,600 pounds) Direct labor (6,650 hours) Variable overhead Fixed overhead Total manufacturing costs $ 22,320 83,790 66,638 30,462 $203,210 The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored. (a) Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 125.) Total materials variance Materials price variance + Materials quantity variance Total labor variance Labor price variance Labor quantity variance (b) Compute the total overhead variance. Total overhead variance LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR PROBLEM

Answer 1

calculation of direct material price variance:

= (Standard price per unit of material - Actual price per unit of material) × Actual quantity

= ($6/Pound - $6.20/Pound ) × 3600 Pound = $720 U F

Calculation of direct material quantity variance

=(standard quantity of material required for actual production - actual quantity used) × Standard price per unit

((3400-3600 Pound )X $6 = $1200 UF

* Actual Price/ Pound= 22320/3600=$6.20

Calculation of direct labor rate variance

= (Standard direct labor rate per hour - actual direct labor rate per hour) × Actual hours used

= ($12.20/hour - $12.60/hour) × 6650 Hours= $2660 UF

* Actual Hourly Rate:=$83790/6650=$12.60/Hour

Calculation of direct labor efficiency variance:

= (standard hours required for actual production - actual hours used) × standard overhead recovery rate

= (2 Hour × 3400 Unit - 6650) × $12.20 = $1830 F

Total Overhead Variance= Applied Overhead- Actual Overhead

($14X (2 HourX 3400 Unit)- (66638+30462)

(95200-97100)= $1900 UF