Problem 23-1A Costello Corporation manufactures a single product. The standard c

Question

Problem 23-1A

  

Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials—2 pound plastic at $7.05 per pound $ 14.10 Direct labor—1.00 hours at $12.00 per hour 12.00 Variable manufacturing overhead 7.00 Fixed manufacturing overhead 3.00 Total standard cost per unit $36.10
The predetermined manufacturing overhead rate is $10 per direct labor hour ($10.00 ÷ 1.00). It was computed from a master manufacturing overhead budget based on normal production of 5,100 direct labor hours (5,100 units) for the month. The master budget showed total variable costs of $35,700 ($7.00 per hour) and total fixed overhead costs of $15,300 ($3.00 per hour). Actual costs for October in producing 3,100 units were as follows.
Direct materials (6,310 pounds) $ 45,180 Direct labor (2,960 hours) 36,645 Variable overhead 21,698 Fixed overhead 11,242     Total manufacturing costs $114,765
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.   

  

Explanation / Answer

Particulars Standard Actual Qty Rate amount Qty Rate amount Materials        6,200.00           7.05          43,710.00        6,310.00            7.16          45,180.00 Labour        3,100.00         12.00          37,200.00        2,960.00          12.38          36,645.00 Actual output        3,100.00 Materials reqd(3100*2))        6,200.00 Labour hrs reqd(3100*1)        3,100.00 Materials Vaiance =Std Cost - Actual Cost Materials Vaiance =43,710 - 45,180 Materials Vaiance = 1,470 U DMPV = (SP-AP)*AQ DMPV = (7.05-7.16)6310 DMPV = 694.50 U DMQV= (SQ-AQ)SP DMQV= (6200-6310)7.05 DMQV= 775.50 U Labour cost variance = Std Cost - Actual Cost Labour cost variance = 37200 - 36645 Labour cost variance = 555 F DLPV= (SR-AR)AH DLPV= (12-12.38)2960 DLPV= 1125 U DLQV = (SH-AH)SR DLQV = (3100- 2960)12 DLQV = 1680 F Total Overhead per unit              10.00 No of units        3,100.00 Budgeted Overhead Cost(3100*10)      31,000.00 Actual Overhead=21698 + 11242      32,940.00 Overhead Cost Variance = Std Cost - Actual Cost Overhead Cost Variance = 31000-32940 Overhead Cost Variance = 1940 U

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