Please show all steps and calcualations. Thanks Problem 23-1A Costello Corporati
ID: 2470599 • Letter: P
Question
Please show all steps and calcualations. Thanks
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 $6.33 per pound Direct labor-2.00 hours at $12.00 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit 12.66 24.00 14.00 14.00 $64.66 The predetermined manufacturing overhead rate is $14 per direct labor hour ($28.00 ÷ 2.00). It was computed from a master manufacturing overhead budget based on normal production of 10,400 direct labor hours (5,200 units) for the month. The master budget showed total variable costs of $72,800 ($7.00 per hour) and total fixed overhead costs of $72,800 ($7.00 per hour). Actual costs for October in producing 4,700 units were as follows Direct materials (9,550 pounds) Direct labor (9,260 hours) Variable overhead Fixed overhead 62,075 114,361 98,566 35,124 $310,126 Total manufacturing costs 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 ignoredExplanation / Answer
Total Material Variance = Total Standard cost of actual production at standard rate - Actual cost incurred
= (4700 * 2* 6.33) - 62075 = $2573 UF
Material price variance = (6.33 - 6.50) 9550 = $1623.50 UF
Material quality variance = [(4700 * 2) - 9550] * $6.33 = $949.50 UF
Total Labor Variance = Total Standard Labor cost of actual production at standard rate - Actual labor cost incurred
= (4700 * 2* 12) - 114361 = $1561 UF
Labor price variance = [12 - (114361/9260)] 9260 = $3241 UF
Labor quality variance = [(4700 * 2) - 9260] * $12 = $1680 F
Total overhead variance = [4700 * (14 + 14)] - (98566 + 35124) = $2090 UF
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