Curator Corp is manufacturing one product in which the standard cost per unit is

Question

Curator Corp is manufacturing one product in which the standard cost per unit is:

Direct labor: 0.5 hours at $11/hr $5.50

Direct materials: 1 lb plastic at $6.00 per pound $6.00

Variable Manuf overhead $2.75

Fixed Manuf overhead $2.25

Total standard cost per unit $16.50

The predetermined manuf overhead rate is $10 per direct labor hor ($5.00/0.5). This was computed from a master manufact overhead budget based on normal production of 2500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $13,750 ($5.50 per hour) and total fixed overhead costs of $11,250 ($4.50 per hour). THe actual costs for the month of Oct in producting 4200 units were:

Direct labor (2000 hours) $ 22,400

Direct materials (4,300 pounds) $ 26,230

variable overhead $14,700

Fixed overhead $ 8,100

Total manufa costs $71,430

The purchasing dept buys the quantities of raw material that are expected to be used in production each month. Raw materials inventories, therefore, are ignored.  

Computer the overhead controllable variance and the overhead volume variance.  

Explanation / Answer

Calculation of Overhead Controllable Variance :-

Overhead Volume Variance :-

Particulars Amount($) Amount($) Actual Factory Overhead ($14700+$8100) 22800 Less:Budgeted Allowance based on Standard hours Allowed:- Fixed Overhead budgeted 11250 Variable Overhead (2000 hour * $5.5) 11000 (22250) Overhead Controllable Variance 550 unfav.

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