Mifflin Corporation manufactures a single product. The standard cost per unit of
ID: 2359140 • Letter: M
Question
Mifflin Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials- 1 pound plastic at $7.00 per pound $7.00 Direct labor- 1.5 hours at $12.00 per hour $18.00 Variable manufacturing overhead $11.25 Fixed manufacturing overhead $ 3.75 Total standard cost per unit $40.00 The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00/1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows. Direct materials (5,100 punds) $37,230 Direct labor (7,000 hours) $87,500 Variable overhead $56,170 Fixed overhead $19,680 Total manufacturing costs $200,580 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. Instructions b. Compute the total overhead varianceExplanation / Answer
Material QTY Variance = (actual units - standard units ) * standard price
= (5100 - 4900 ) * 7
=1400
Material Price Variance = (actual price - standard price ) * actual units
= (7.3 - 7 ) * 5100
=1530
Labour QTY Variance = (actual hours - standard hours ) * standard price
=(7000 - 7350) *12
=(4200)
Labour Price Variance = (actual price - standard price ) * actual units
= (12 - 12.5 ) * 7000
=3500
Variable FOH QTY Variance = (actual hours - standard hours ) * standard price
(7000 - 7350 ) * 7.5
(2625)
Variable FOH Price Variance = (actual price - standard price ) * actual units
= (8.0243- 7.5 ) * 7000
=3670
Fixed FOH QTY Variance = (actual hours - standard hours ) * standard price
(7000 - 7350 ) * 2.5
(875)
Fixed FOH Price Variance = (actual price - standard price ) * actual units
= (2.8114- 2.5 ) * 7000
=2180