Rogen Corporation manufactures a single product. The standard cost per unit of p
ID: 2473075 • Letter: R
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—2.00 hours at $11.85 per hour 23.70 Variable manufacturing overhead 12.00 Fixed manufacturing overhead 12.00 Total standard cost per unit $53.70 The predetermined manufacturing overhead rate is $12 per direct labor hour ($24.00 ÷ 2.00). It was computed from a master manufacturing overhead budget based on normal production of 11,800 direct labor hours (5,900 units) for the month. The master budget showed total variable costs of $70,800 ($6.00 per hour) and total fixed overhead costs of $70,800 ($6.00 per hour). Actual costs for October in producing 3,700 units were as follows. Direct materials (3,890 pounds) $ 23,729 Direct labor (7,300 hours) 87,965 Variable overhead 63,934 Fixed overhead 26,966 Total manufacturing costs $202,594 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 $ Materials price variance $ Materials quantity variance $ Total labor variance $ Labor price variance $ Labor quantity variance $ (b) Compute the total overhead variance. Total overhead variance $
Explanation / Answer
Units 5,900 3700 p.u Hours 11,800 Direct Materials 6.00 (1 pund plastic @ 6 23729 6.1 3890 Direct labour 23.70 (2 hours @ 11.85 87965 12.05 7300 Variable Manufacturing overhead 12.00 (2 @$6 63934 Fixed Manufacturing overhead 12.00 (2@$6) 26966 53.70 202594 316,830.00 Material Variance Quantity Variance Standard Cost per unit (Actual usage per unit - Standard usage per unit) Std cost per unit $6 Actual usage per unit 3,890.00 Standard usage per unit 3,700.00 Material Quantity Variance 1,140.00 (Favourable) Price Variance Actual Quantity used *(Actual Price - Standard Price) Actual Quantity 3,700.00 Actual Price 6.10 Standard Price 6.00 Material Price Variance 370.00 (Adverse) Total Material Variance 770.00 Favourable Labour Variance Labour Price Variance Actual hours *(Actual rate - standard rate) Actual hours 7,300.00 Actual rate 12.05 Standard rate 11.85 Labour Price Variance 1,460.00 Favourable Labour Quantity Variance Standard Rate *(Actual Hours - Standard Hours) Standard Rate 11.85 Actual Hours 7,300.00 Standard Hours 7,400.00 Labour Quantity Variance 1,185.00 Adverse Total Labour Variance 275.00
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