Costello Corporation manufactures a single product. The standard cost per unit o
ID: 2453922 • Letter: C
Question
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials—1 pound plastic at $7.17 per pound $ 7.17 Direct labor—2.50 hours at $12.00 per hour 30.00 Variable manufacturing overhead 15.00 Fixed manufacturing overhead 15.00 Total standard cost per unit $67.17 The predetermined manufacturing overhead rate is $12 per direct labor hour ($30.00 ÷ 2.50). It was computed from a master manufacturing overhead budget based on normal production of 12,750 direct labor hours (5,100 units) for the month. The master budget showed total variable costs of $76,500 ($6.00 per hour) and total fixed overhead costs of $76,500 ($6.00 per hour). Actual costs for October in producing 3,500 units were as follows. Direct materials (3,640 pounds) $ 26,572 Direct labor (8,610 hours) 105,817 Variable overhead 78,223 Fixed overhead 28,907 Total manufacturing costs $239,519 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.
Total materials variance?
Materials price variance?
Materials quantity variance?
Total labor variance?
Labor price variance?
Labor quantity variance?
Explanation / Answer
Total materials variance Standard Actual Price 7.17 *3500 Given 25095 26572 -1477 Unfavorable Direct material Price variance Standard Actual Price variance 7.17 *3640 Given 26098.8 26572 -473.20 Unfavorable Materials quantity variance Standard Actual Usage variance 7.17 *3500 7.17 *3640 25095 26098.8 -1003.8 Unfavorable Labor Price variance Standard Actual Price variance 8610*12 Given 103320 105817 -2497 Unfavorable LaborLabor quantity variance Standard Actual hour variance 3500*2.5*12 8610*12 105000 103320 1680 Favourable Total labor variance Standard Actual Price 3500*2.5*12 Given variance 105000 105817 -817 Unfavorable