.0000 Sprint 6:47 PM edugen.wileyplus.com Kmmet Accounting Teals for Business De

Question

.0000 Sprint 6:47 PM edugen.wileyplus.com Kmmet Accounting Teals for Business Decision Haking, Se Problem 23-7A E Your answer is partially correct. Try again Costello Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $7.76 pertx Direct labor-1 .00 hours $1 Total standard cost per unit The predetermined manufacturing overhead fate is $14 per direct labor hour ($14.00 ÷ 1.00). It was computed from a master manufacturing overhead budget based on normal production of 5,600 direct labor hours (5,600 units) for the month. The master budget showed total variable costs of $30,800 ($5.50 per hour) and total fixed overhead costs of $47,600 ($8.50 per hour),. Actual costs for October in producing 4,700 units were as follows 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. Compute the overhead controllable variance and the overhead volume variance

Explanation / Answer

OVER HEAD CONTROLLABLE VARIANCE

= ACTUAL OVERHEAD - (BUDGETED OVERHEAD PER HOUR * STANDARD NUMBER OF HOUR)

= ($17605 + $50205) - ($14 * 4700)

= $67810 - $65800

=- $2010 FAVOURABLE

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OVERHEAD VOLUME VARIANCE

= (ACTUAL HOUR CONSUMED - BUDGETED HOUR) * BUDGETED OVERHEAD PER HOUR

= (4500 - 5600) * $14

= -$15400 UNFAVOURABLE

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