Problem 23-1A Compute all of the materials and labor variances. Problem 23-1A Co

Question

Problem 23-1A

Compute all of the materials and labor variances.

Problem 23-1A

Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials—1 pound plastic at $7.74 per pound $ 7.74 Direct labor—2.00 hours at $12.00 per hour 24.00 Variable manufacturing overhead 15.00 Fixed manufacturing overhead 9.00 Total standard cost per unit $55.74
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 11,600 direct labor hours (5,800 units) for the month. The master budget showed total variable costs of $87,000 ($7.50 per hour) and total fixed overhead costs of $52,200 ($4.50 per hour). Actual costs for October in producing 3,200 units were as follows.
Direct materials (3,350 pounds) $ 26,331 Direct labor (6,250 hours) 77,000 Variable overhead 58,596 Fixed overhead 20,364     Total manufacturing costs $182,291
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

Answer:

Material price variance = (SP-AP)*AQ = [7.74-(26331/3350)]*3350 = (7.74-7.86)*3350 = $402 U

Material quantity variance = (SQ-AQ)*SP = (3200-3350)*7.74 = $1161 U

Total material variance = $402 U+$1161 U= $1563 U

Labor price variance = (SP-AP)*AQ = [12-(77000/6250)]*6250 =(12-12.32)*6250 = $2000 U

Labor quantity variance = (SQ-AQ)*SP = [(3200*2) - 6250]*12 = $1800 F

Total labor variance = $2000 U+$1800 F = $200 U

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.