Question

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		$ 6.00
Direct labor—0.50 hours at $11.95 per hour		5.98
Variable manufacturing overhead		3.00
Fixed manufacturing overhead		5.00
Total standard cost per unit		$19.98

The predetermined manufacturing overhead rate is $16 per direct labor hour ($8.00 ÷ 0.50). It was computed from a master manufacturing overhead budget based on normal production of 2,600 direct labor hours (5,200 units) for the month. The master budget showed total variable costs of $15,600 ($6.00 per hour) and total fixed overhead costs of $26,000 ($10.00 per hour). Actual costs for October in producing 3,000 units were as follows.

Direct materials (3,190 pounds)		$ 19,459
Direct labor (1,390 hours)		17,167
Variable overhead		18,238
Fixed overhead		7,562
Total manufacturing costs		$62,426

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		$enter a dollar amount rounded to 0 decimal places		select a type of the varianceFavorableNeither favorable nor unfavorableUnfavorable UnfavorableFavorableNeither favorable nor unfavorable
Materials price variance		$enter a dollar amount rounded to 0 decimal places		select a type of the varianceUnfavorableFavorableNeither favorable nor unfavorable UnfavorableFavorableNeither favorable nor unfavorable
Materials quantity variance		$enter a dollar amount rounded to 0 decimal places		select a type of the varianceFavorableNeither favorable nor unfavorableUnfavorable UnfavorableFavorableNeither favorable nor unfavorable
Total labor variance		$enter a dollar amount rounded to 0 decimal places		select a type of the varianceFavorableNeither favorable nor unfavorableUnfavorable FavorableUnfavorableNeither favorable nor unfavorable
Labor price variance		$enter a dollar amount rounded to 0 decimal places		select a type of the varianceUnfavorableNeither favorable nor unfavorableFavorable UnfavorableFavorableNeither favorable nor unfavorable
Labor quantity variance		$enter a dollar amount rounded to 0 decimal places		select a type of the varianceFavorableUnfavorableNeither favorable nor unfavorable FavorableUnfavorableNeither favorable nor unfavorable

(b)

Compute the total overhead variance.

Total overhead variance

$enter the total overhead variance in dollars

select a type of the total overhead varianceUnfavorableNeither favorable nor unfavorableFavorable UnfavorableFavorableNeither favorable nor unfavorable

Answer 1

(a) -- Compute all of the materials and labor variances.

Answer -

	Calculations
Total materials variance	= (Actual Quantity * Actual Price) - (Standard Quantity * Standard Price) = (3190 * $6.1 [$19459/3190] ) - (3000 * $6) = $19459 - $18000 = $1459	$1459 Unfavourable
Materials price variance	= (Actual Quantity * Actual Price) - (Actual Quantity * Standard Price) = (3190 * $6.1) - (3190 * $6) = $19459 - $19140 = $319	$319 Unfavourable
Materials quantity variance	= (Actual Quantity * Standard Price) - (Standard Quantity * Standard Price) = (3190 * $6) - (3000 * $6) = $19140 - $18000 = $1140	$1140 Unfavourable
Total labor variance	= (Actual Hours * Actual Rate) - (Standard Hours * Standard Rate) = (1390 * $12.35 [$17167/1390] ) - (1500 [3000*0.50] * $11.95) = $17167 - $17925 = $758	$758 Favourable
Labor price variance	= (Actual Hours * Actual Rate) - (Actual Hours * Standard Rate) = (1390 * $12.35) - (1390 * $11.95) = $17167 - $16611 = $556	$556 Unfavourable
Labor quantity variance	= (Actual Hours * Standard Rate) - (Standard Hours * Standard Rate) = (1390 * $11.95) - (1500 * $11.95) = $16611 - $17925 = 1314	$1314 Favourable

.

(b) -- Compute the total overhead variance.

Answer -

	Calculations
Total overhead variance	= Actual Overhead - Overhead Applied = ($18238 + $7562) - (1500 * $16) = $25800 - $24000 = $1800	$1800 Unfavourable