Whispering Corporation manufactures a single product. The
standard cost per unit of product is shown below.
Direct materials—1 pound plastic at $7.00 per pound | $ 7.00 | |
Direct labor—2.5 hours at $11.80 per hour | 29.50 | |
Variable manufacturing overhead | 17.50 | |
Fixed manufacturing overhead | 17.50 | |
Total standard cost per unit | $71.50 |
The predetermined manufacturing overhead rate is $14.00 per direct
labor hour ($35.00 ÷ 2.5). It was computed from a master
manufacturing overhead budget based on normal production of 13,250
direct labor hours (5,300 units) for the month. The master budget
showed total variable costs of $92,750 ($7.00 per hour) and total
fixed overhead costs of $92,750 ($7.00 per hour). Actual costs for
October in producing 3,900 units were as follows.
Direct materials (4,030 pounds) | $ 28,613 | |
Direct labor (9,600 hours) | 116,160 | |
Variable overhead | 103,738 | |
Fixed overhead | 34,862 | |
Total manufacturing costs | $283,373 |
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.
Total materials variance | $ |
Neither favorable nor unfavorable, Unfavorable, Favorable |
||
Materials price variance | $ |
UnfavorableFavorableNeither favorable nor unfavorable |
||
Materials quantity variance | $ |
UnfavorableFavorableNeither favorable nor unfavorable |
||
Total labor variance | $ |
FavorableNeither favorable nor unfavorableUnfavorable |
||
Labor price variance | $ |
Neither favorable nor unfavorableUnfavorableFavorable |
||
Labor quantity variance | $ |
UnfavorableFavorableNeither favorable nor unfavorable |
(b)
Compute the total overhead variance.
Total overhead variance | $ |
Neither favorable nor unfavorable, Favorable, Unfavorable |
Whispering Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct ma...
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