Costello Corporation manufactures a single product. The standard cost per unit o
ID: 2459938 • Letter: C
Question
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below. The predetermined manufacturing overhead rate is $14 per direct labor hour ($14.00 1.00). It was computed from a master manufacturing overhead budget based on normal production of 5,100 direct labor hours (5,100 units) for the month. The master budget showed total variable costs of $30,600 ($6.00 per hour) and total fixed overhead costs of $40,800 ($8.00 per hour). Actual costs for October in producing 4,700 units were as follows. 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. Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 250.)Explanation / Answer
No.of units 4700 Amount in $ Actual Quantity (AQ) 9580.00 Actual Quantity per unit 2.04 Actual rate (AR) per pound 7.45 Actual cost(AC) 71371.00 Standard Quantity 2.00 Standard Rate (SR) per pound 7.15 Standard Quantity for actual outputb 4700*2 9400.00 Actual hours 4560.00 Actual hours per unit 0.97 Actual Cost for labour 12.30 Actual Cost 56088.00 Standard hours 1.00 Standard rate per unit 12.00 Standard rate per hour 12.00 Standard hours allowed for work done 4700*1 4700.00 Standard Variable overhead Hours 4700.00 Standard rate for variable overhead per hour 6.0 Actual variable cost 47440 Actual rate for actual hours for variable over. 47440/4560 10.40 Budgeted Fixed Overhead 40800 Absorbed Fixed Overhead $8*4560 36480 Direct Material Price Variance=Actual Quantity x Actual Price - Actual Quantity x Standard Price 9580*(7.45-7.15) 2874 Unfavourable Direct Material Usage Variance:(Actual Quantity - Standard Quantity) x Standard Price (9580-9400)*7.15 1287 Unfavourable Total Material Variance 4161 Unfavourable Direct Labor Rate Variance: Actual Cost-Standard Cost of Actual Hours 56088-(4560*12) 1368 unfavourable Direct Labor Effciency Variance: Standard Rate(Actual Hours-Standard H0urs) 12*(4560-4700) -1680 Favourable Total Labor Variance -312 Favourable Total Overhead Variacnce= Absorbed Overhead Cost-Actual overhead Cost Absorbed Overhead Cost Variable= 4560*6 27360 Fixed= 4560*8 36480 Absorbed Cost 63840 Actual 47440+20180 67620 total Overhead Variance -3780 Unfavourable