Costello Corporation manufactures a single product. The standard cost per unit o
ID: 2465469 • Letter: C
Question
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials—2 pound plastic at $7.47 per pound $ 14.94
Direct labor—2.50 hours at $12.00 per hour 30.00
Variable manufacturing overhead 13.75
Fixed manufacturing overhead 21.25
Total standard cost per unit $79.94
The predetermined manufacturing overhead rate is $14 per direct labor hour ($35.00 ÷ 2.50). It was computed from a master manufacturing overhead budget based on normal production of 13,250 direct labor hours (5,300 units) for the month. The master budget showed total variable costs of $72,875 ($5.50 per hour) and total fixed overhead costs of $112,625 ($8.50 per hour). Actual costs for October in producing 4,300 units were as follows.
Direct materials (8,780 pounds) $ 67,606
Direct labor (10,570 hours) 130,962
Variable overhead 109,111
Fixed overhead 43,639
Total manufacturing costs $351,318
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. 125.)
Total materials variance $
Materials price variance $
Materials quantity variance $
Total labor variance $
Labor price variance $
Labor quantity variance $
Explanation / Answer
Direct Material Price Variance 8600*7.47-8600*7.7 $(1,978) Qty Variance 8600*7.7-8780*7.7 $(1,386) Total Variance $(3,364) Direct Labor Price Variance 10750*12-10750*12.39 $(4,193) Qty Variance 10750*12.39-10570*12.39 $ 2,230 Total Variance $(1,962)