The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.

Question

The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows.

Direct materials (5,100 pounds) $ 37,230
Direct labor (7,000 hours) 87,500
Variable overhead 56,170
Fixed overhead
19,680

Total manufacturing costs
$200,580


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.





Incorrect.

Compute all of the materials and labor variances.
Total materials variance $ 2930 Unfavorable
Materials price variance $ 1530 Unfavorable
Materials quantity variance $ 1400 Unfavorable
Total labor variance $ Favorable
Labor price variance $
Labor quantity variance $ Favorable






Incorrect.

Compute the total overhead variance.
$ Unfavorable

Explanation / Answer

Standard Quantity for actual output x Standard Price = 4900 x 7 = $34,300
Actual Quantity for actual output x Standard Price = 5100 x 7 = $35700
Actual Quantity for actual output x Actual Price = $37,230

Total Material Variance = 34300

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