Question

A manufactured product has the following information for June. Standard Actual Direct materials (6 lbs. @ $8 per lb.) 48,500 lbs. @ $8.10 per lb. Direct labor (2 hrs. @ $16 per hr.) 15,700 hrs. @ $16.50 per hr. Overhead (2 hrs. @ $12 per hr.) $ 198,000 Units manufactured 8,000 (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 of Total cost variance

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer 3 Part 1) 6 Direct Material (6*8) 7 Direct Labour(2*16) 8 Overheads(2*12) 9 Total 104 10 11 Part 2) 12 Total Cost variance = Actual cost - Standard cost 13 =(actual direct material cost+ actual direct labour cost+ actual overheads cost)-( units manufactured* standard cost per unit) 14 =((48500*8.1)+(15700*16.5)+198000)-(8000*104) 15 = $ 17900 Unfavourable 16 17 Thus the correct answer is 18 Total Cost Variance $17,900 Unfavourable 19