Question

Rogen uses the standard cost system. The Static original budgeted production was 5,000 units for October. The Input standards were: Std Quantity x Std Price per input =Std Cost per Output U Direct materials 1 lb./Output unit x $7/b. = $7 per output unit Direct labor 1.6 hrs. /Output unit x $12/hr. = $19.20 per unit Variable manufacturing (Mfg.) overhead 1.6 hrs. x $7.50 per hr = $12 per unit Fixed mfg. overhead (Budget $20,000) 1.6 hrs.. x $2.50 per hr = $4 per unit It Applied the standard costs to Actual Production throughout the period. As of the end of the period, a Flexible budget was prepared, to compute Production volume variance, and the Quantity Usage efficiency variances for Material and Labor actual usages separately When Actual Costs are known a couple months later, it retroactively calculated Material Purchase Price and Labor Rate (or Price) variances; and Overhead Controllable variances. Rogen gathered the following actual results for October: Actual Units produced 4,800 Direct materials purchased and used (5,100 lbs.) $36,720 Direct labor cost (7,400 hours actual) $92,500 Manufacturing overhead costs incurred: Variable $59,700 and Fixed $21,000.

Answer 1

Solution 7:

Fixed overhead controllable variance = Budgeted fixed overhead - Actual fixed overhead

= $20,000 - $21,000 = $1,000 U

Solution 8:

Variable overhead controllable variance = Standard variable overhead for actual production - Actual variable overhead costs

= (4800*1.60*$7.50) - $59,700

= $2,100 U