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—1.50 hours at $12.20 per hour		18.30
Variable manufacturing overhead		9.00
Fixed manufacturing overhead		15.00
Total standard cost per unit		$48.30

The predetermined manufacturing overhead rate is $16 per direct labor hour ($24.00 ÷ 1.50). It was computed from a master manufacturing overhead budget based on normal production of 8,700 direct labor hours (5,800 units) for the month. The master budget showed total variable costs of $52,200 ($6.00 per hour) and total fixed overhead costs of $87,000 ($10.00 per hour). Actual costs for October in producing 4,300 units were as follows.

Direct materials (4,500 pounds)		$ 27,900
Direct labor (6,250 hours)		77,500
Variable overhead		78,430
Fixed overhead		26,670
Total manufacturing costs		$210,500

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		$		Neither favorable nor unfavorableFavorableUnfavorable
Materials price variance		$		UnfavorableFavorableNeither favorable nor unfavorable
Materials quantity variance		$		Neither favorable nor unfavorableUnfavorableFavorable
Total labor variance		$		FavorableUnfavorableNeither favorable nor unfavorable
Labor price variance		$		FavorableNeither favorable nor unfavorableUnfavorable
Labor quantity variance		$		FavorableUnfavorableNeither favorable nor unfavorable

(b)

Compute the total overhead variance.

Total overhead variance

Answer 1

SQ = Particulars Direct Material 4300 X SQL 4300 1.00 = SP 6 4300 AQ 4500 AP 6.2 Material Price Variance (MPV) = (SP-AP) AQ >>MPV = 1 6 - 6.2 ) * >>MPV = -900.00 Unfavorable 4500 Total Material variance (TMV) = ( SQ * SP) - (AQ * AP) >>TMV = 1 4300 * 6 ) - ( 4500 * 6.2 >>TMV = -2100 Unfavorable ) Material Quantity Variance (MQV) = ( SQ - AQ) SP >>MQV = 1 4300 - 4500 * 6 >>MQV = -1200.00 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 4300 X SH 6450 1.50 = SR 12.2 6450 A HP 6250 A R 12.40 Labour Price Variance (LPV) = ( SR - AR ) AHP >>LPV = 1 12.2 - 12.4 ) * >>LPV = -1250 Unfavorable 6250 Labour Quantity Variance (LQV) = ( SH - AHW) SR >>LQV = ( 6450 - 6250 ) * 12.2 >>LQV = 2440 Favorable Total Labour variance (TLV) = SH * SR - AHP * AR >>TLV = ( 6450 * 12 ) - ( 6250 >>TLV = 1190 Favorable * 12 ) Note-1 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.