Question

Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at 58 per pound Direct labor-2.00 hours at $12.15 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit $8.00 24.30 12.00 8.00 $52.30 The predetermined manufacturing overhead rate is $10 per direct labor hour ($20.00 - 2.00). It was computed from a master manufacturing overhead budget based on normal production of 11,200 direct labor hours (5,600 units) for the month. The master budget showed total variable costs of $67,200 ($6.00 per hour) and total fixed overhead costs of $44,800 ($4.00 per hour). Actual costs for October in producing 4,300 units were as follows. Direct materials (4,480 pounds) Direct labor (8,480 hours) Variable overhead $36,288 106,424 61,918 25,882 $230,512 Fixed overhead Total manufacturing costs 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.

Answer 1

SQ = Particulars Direct Material 4300 X SQ 4300 1.00 = SP 8 4300 AQ 4480 AP 8.1 Material Price Variance (MPV) = (SP-AP) AQ >>MPV = 1 8 - 8.1 ) * >>MPV = -448.00 Unfavorable 4480 Total Material variance (TMV) = (SQ * SP) - (AQ * AP) >>TMV = 1 4300 * 8 ) - ( 4480 * 8.1 ) >>TMV = -1888 Unfavorable Material Quantity Variance (MQV) = ( SQ - AQ) SP >>MQV = 1 4300 - 4480 * 8 >>MQV = -1440.00 Unfavorable Note-1 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantiity consumed AP = Actual Price per Raw material

SH = Particulars Direct Labour 4300 X SH I 8600 2.00 = SRL 12.15 8600 AHP 8480 AR 12.55 Labour Price Variance (LPV) = ( SR - AR ) AHP >>LPV = ( 12.15 - 12.55 ) * >>LPV = -3392 Unfavorable 8480 Labour Quantity Variance (LQV) = ( SH - AHW) SR >>LQV = 1 8600 - 8480 ) * 12.15 >>LQV = 1458 Favorable Anw/ 94215 Total Labour variance (TLV) = SH * SR - AHP * AR >>TLV = ( 8600 * 12 ) - ( 8480 >>TLV = -1934 Unfavorable * 13 ) Note -1 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.