Please help me on this homewrok Costello Corporation manufactures a single produ
ID: 2477717 • Letter: P
Question
Please help me on this homewrok
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below Direct materials-2 pound plastic at $6 per pound Direct labor-1.00 hours at $12.00 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit $ 12.00 12.00 6.50 3.50 $34.00 The predetermined manufacturing overhead rate is $10 per direct labor hour ($10 ÷ 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 $33,150 ($6.50 per hour) and total fixed overhead costs of $17,850 ($3.50 per hour). Actual costs for October in producing 3,700 units were as follows Direct materials (7,550 pounds) Direct labor (3,550 hours) Variable overhead Fixed overhead $ 46,131 43,701 25,974 12,966 $128,772 Total manufacturing costs 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 (a) Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 5,275.) Total materials variance Materials price variance Materials quantity variance Total labor varianceExplanation / Answer
Material cost Standard Quantity Price Cost Direct material 2 pound $ 6 per pound $12 Revised Budget for 3700 units Quantity Price Cost Direct material 7400 $ 6 per pound $44,400 = 3700 x 2 pound Actual values Quantity Price Cost Direct material 7550 $6.11 $46,131 1) Total Material variance This Variance measures overalldirect material cost variance on manufacturing = Budgetd cost of actual output - actual cost = 44400-46131 1731 Unfavourable 2) Material Price Variance This measures change in cost on account of price change = Actual Units ( Standard price - actual price) = 7550 ( 6 - 6.11 ) 831 un favourable 3) Material quantity variance This measures change in cost on account of change in units used in production = Standard price ( Standard quantity - actual quantity) = 6 (7400-7550) 900 Un favourable Budget for labor Hours Rate Cost Direct Labor 1 $12.00 $12 Budget for 3700 units Hours Rate Cost Direct Labor 3700 $12.00 $44,400 Actual for 3700 units Hours Rate Cost Direct Labor 3550 $12.31 $43,701 4 Total Labor Variance This measures overall labor cost variance = Budget cost of actual output -actual cost = 44400-43701 699 Favourable 5 Labor price variance This measures change in cost on account of labor rate = Acctual hours ( standard price - actual price) = 3550 (12-12.31) 1101 Un favourable 6 labor quantity variane This measures change in cost on account of labor hours used = Standard price ( Budgeted hours - actual hours) = 12 (3700-3550) = 12*150 1800 Favourable