Question

*Problem 23-1A Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. $ 7.00 Direct materials-1 pound plastic at $7 per pound Direct labor-1.00 hours at $11.65 per hour Variable manufacturing overhead Fixed manufacturing overhead 11.65 7.00 7.00 $32.65 Total standard cost per unit The predetermined manufacturing overhead rate is $14 per direct labor hour ($14.00 – 1.00). It was computed from a master manufacturing overhead budget based on normal production of 5,300 direct labor hours (5,300 units) for the month. The master budget showed total variable costs of $37,100 ($7.00 per hour) and total fixed overhead costs of $37,100 ($7.00 per hour). Actual costs for October in producing 4,600 units were as follows. $ 33,867 Direct materials (4,770 pounds) Direct labor (4,440 hours) Variable overhead Fixed overhead 52,614 48,942 17,258 $152,681 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. (a) Compute all of the materials and labor variances. (Round answers to o decimal places, e.g. 125.) Total materials variance Materials price variance Materials quantity variances Total labor variance Labor price variance Labor quantity variance (b) Compute the total overhead variance Total overhead variance $

Answer 1

SQ = Particulars Direct Material 4600 X SQL 4600 1.00 = SP 7 4600 AQ 4770 AP 7.1 Material Price Variance (MPV) = ( SP-AP) AQ >>MPV = 1 7 - 7.1 ) * >>MPV = -477.00 Unfavorable 4770 Total Material variance (TMV) = ( SQ * SP) - (AQ * AP) >>TMV = 1 4600 * 7 - 4770 * 7.1 >>TMV = -1667 Unfavorable ) Material Quantity Variance (MQV) = ( SQ - AQ) SP >>MQV = 1 4600 - 4770 * 7 >>MQV = -1190.00 Unfavorable Note-1 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantity consumed AP = Actual Price per Raw material

SH = Particulars Direct Labour 4600 X SH 4600 1.00 = SR 11.65 4600 AHP 4440 AR 11.85 Labour Price Variance (LPV) = ( SR - AR) AHP >>LPV = ( 11.65 - 11.85 ) * >>LPV = -888 Unfavorable 4440 Labour Quantity Variance (LQV) = ( SH - AHW) SR >>LQV = ( 4600 - 4440 * 11.65 >>LQV = 1864 Favorable Total Labour variance (TLV) = SH * SR - AHP * AR >>TLV = ( 4600 * 12 ) - ( 4440 >>TLV = 976 Favorable * 12 ) Note-1 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.