Question

Required information [The following information applies to the questions displayed below.) A manufactured product has the following information for June. Direct materials Direct labor Overhead Units manufactured Standard (5 lbs. @ $8 per lb.) (2 hrs. @ $17 per hr.) (2 hrs. @ $12 per hr.) Actual 43,900 lbs. @ $8.10 per lb. 17,100 hrs. @ $17.40 per hr. $214,700 8,700 (1) Compute the standard cost per unit. Direct materials Direct labor Overhead Total (2) Compute the total cost variance for June. Indicate whether the cost variance is favorable or unfavorable. Total cost variance

Answer 1

	(1)	Standard Cost per unit
		Direct material	$40	(5*8)
		Direct labor	$34	(2*17)
		Overhead	$24	(2*12)
			$98
	(2)	Total standard cost for 8700 units	$852,600	(98*8700)
		Total actual cost
		Direct material	$355,590
		Direct labor	$297,540
		Overhead	$214,700
		Actual cost	$867,830
		Total cost variance	$15,230	Unfavourable	(867,830-852,600)
		Direct material price variance	(SP-AP)*AQ
			(8-8.1)*43,900
			-4390
			4390	Unfavourable
		Direct material quantity variance	(SQ-AQ)*SP
			(8700*5-43,900)*8
			(43,500-43,900)*8
			-3200
			3200	Unfavourable